Asked by
Dylan Evans
on Dec 12, 2024
Verified
Melanie has a choice of driving or flying from Durham, North Carolina to Knoxville, Tennessee for a one-day business trip. If she travels by air, she will be able to work seven hours in Knoxville, while if she drives, she will only have time to work four hours once there. Her expected income from each hour of work in Knoxville is $40. If Melanie a rational decision maker, she will chose to fly if and only if the price differential (air cost minus driving cost) is less than
A) $40.
B) $120.
C) $160.
D) $280.
Price Differential
The difference in price between two related goods, markets, or levels of supply chain.
Rational Decision Maker
A person who uses logic and reasoning, weighing costs and benefits, to make choices that maximize their satisfaction.
Business Trip
A journey undertaken for work or professional purposes, often involving travel outside one's regular place of business.
- Specify and sum up the opportunity costs in different economic contexts.
- Explain the relationship between opportunity costs, time, and decision-making.
Verified Answer
LM
Learning Objectives
- Specify and sum up the opportunity costs in different economic contexts.
- Explain the relationship between opportunity costs, time, and decision-making.