Question

The price of an airline ticket from St. Louis to Washington D.C. costs $250. A bus ticket costs $100. Traveling by plane takes 2 hours compared with 32 hours by bus. Other things constant, Andrew would gain by choosing air travel if, and only if, he values his time at more than a. $4.69 per hour. b. $5 per hour. c. $10 per hour. d. $75 per hour.

Answer 1

Answer:

He would gain by choosing air travel if, and only if, he values his time at more than $5 per hour.

Step-by-step explanation:

The problem states that:

A bus ticket from Washington to St. Louis costs $100, while it takes 32 hours to arrive.

A plane ticket from Washington to St. Louis costs $250, while it takes 2 hours to arrive.

Other things constant, Andrew would gain by choosing air travel if, and only if, he values his time at more than

If Andrew choses to go by plane, he saves 32-2 = 30 hours at the expense of $250-$100 = $150.

So, dividing the extra cost by the number of hours saved:

$\frac{150}{30} = 5$

He would gain by choosing air travel if, and only if, he values his time at more than $5 per hour.