You are given an old car by your uncle, who wants you to keep it in working condition so that you can hand it off to your younger brother in three years. It will cost you $1,500 per year to keep it in working condition for your brother. If you skip maintenance altogether, the car will die after two years, but you can pocket the maintenance costs. a. What will you be tempted to do?
Not do the maintenance, because the MC < MB of doing the maintenance and the MC > MB of doing the maintenance.
Do the maintenance, because the MC < MB of doing the maintenance and the MC > MB of doing the maintenance.
Not do the maintenance, because the MC < MB of doing the maintenance and the MC > MB of doing the maintenance.
Not do the maintenance, because the MC < MB of doing the maintenance and the MC < MB of doing the maintenance.
b. Would higher maintenance costs make you more or less likely to do what your uncle wants?
More likely, because the MB of not doing the maintenance rises and the MC of doing the maintenance also rises.
More likely, because the MB of not doing the maintenance falls and the MC of doing the maintenance also falls.
Less likely, because the MB of not doing the maintenance falls and the MC of doing the maintenance rises.
Less likely, because the MB of not doing the maintenance rises and the MC of doing the maintenance also rises.