Question

Becky is a single mother of two young children who spend their days at a daycare center while Becky goes to work. The daycare center closes at 5:30. If parents do not pick up their children at or before 5:30, the daycare center charges a late fee of $5 per child for every 10 minutes the parent is late.
Due to traffic, Becky expects to be 20 minutes late to pick up her children. How much would she be willing to pay for a variable toll road that would get her to the daycare center on time?
a. any price less than $5
b. any price less than $10
c. any price less than $20 1
d. Becky would not be willing to pay out of pocket to avoid traffic.

Answer 1

She expects to be 20 minutes late. She has to pay $5 for every 10 minutes.

20 minutes / 10 minutes = 2

2 x $5 = $10

If she is 20 minutes late she needs to pay $20.

She would be willing to pay anything less that $10, because anything less than 10 would save her money.

Answer: b. any price less than $10