Question

Air travel from New York to Los Angeles costs $800 and takes four hours. A bus ticket between the cities costs $100 and takes 104 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be:

Answer 1

a rational individual, whos time is worth more than 7 dollar per hour would induce to fly rather than drive.

Step-by-step explanation:

bus option $100 104 hours

flight option $800 4 hours

differential $700 100 hours

the differential of 700 dollars allows the consumer to save 100 hours

700/100 = 7 dollar per hour

if a consumer values their time at more than $7 per hour, then it will be better for this consumer to purchase a flight to Ny to LA