It takes 1 hour to travel from New York to Washington D.C. by air and 8 hours by bus. The airfare is $200 and the busfare is $55. If a traveler wishes to minimize the total cost of making this trip, which mode of transportation should be selected if the traveler’s opportunity cost of time spent in transit is $10 per hour? Justify your answer.

It takes 1 hour to travel from New York to Washington D.C. by air and 8 hours by bus. The airfare is $200 and the busfare is $55. If a traveler wishes to minimize the total cost of making this trip, which mode of transportation should be selected if the traveler’s opportunity cost of time spent in transit is $10 per hour? Justify your answer.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter19: Using Economics To Understand The World Around You

Section: Chapter Questions

Problem 3E

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