Clancy has difficulty finding parking in his neighborhood and, thus, is considering the gamble of illegally parking on the sidewalk because of the opportunity cost of the time he spends searching for parking. On any given day, Clancy knows he may or may not get a ticket, but he also expects that if he were to do it every day, the average amount he would pay for parking tickets should converge to the expected value. If the expected value is positive, then in the long un, it will be optimal for him to park on the sidewalk and occasionally pay the tickets in exchange for the benefits of hot searching for parking. Suppose that Clancy knows that the fine for parking this way is $100, and his opportunity cost (OC) of searching for parking is $20 per day. That is, if he parks on the sidewalk and does not get a ticket, he gets a positive payoff worth $20; f he does get a ticket, he ends up with a payoff of

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Clancy has difficulty finding parking in his neighborhood and, thus, is considering the gamble of illegally parking on
the sidewalk because of the opportunity cost of the time he spends searching for parking. On any given day, Clancy
knows he may or may not get a ticket, but he also expects that if he were to do it every day, the average amount he
would pay for parking tickets should converge to the expected value. If the expected value is positive, then in the long
run, it will be optimal for him to park on the sidewalk and occasionally pay the tickets in exchange for the benefits of
not searching for parking.
Suppose that Clancy knows that the fine for parking this way is $100, and his opportunity cost (OC) of searching for
parking is $20 per day. That is, if he parks on the sidewalk and does not get a ticket, he gets a positive payoff worth $20;
if he does get a ticket, he ends up with a payoff of
Transcribed Image Text:Clancy has difficulty finding parking in his neighborhood and, thus, is considering the gamble of illegally parking on the sidewalk because of the opportunity cost of the time he spends searching for parking. On any given day, Clancy knows he may or may not get a ticket, but he also expects that if he were to do it every day, the average amount he would pay for parking tickets should converge to the expected value. If the expected value is positive, then in the long run, it will be optimal for him to park on the sidewalk and occasionally pay the tickets in exchange for the benefits of not searching for parking. Suppose that Clancy knows that the fine for parking this way is $100, and his opportunity cost (OC) of searching for parking is $20 per day. That is, if he parks on the sidewalk and does not get a ticket, he gets a positive payoff worth $20; if he does get a ticket, he ends up with a payoff of
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