Question

Suppose you have just landed a job near the center of a city and you now need to decide where to live. If you live close to the city​ center, your​ round-trip commute will be 15 minutes. If you live in the distant​ suburbs, your​ round-trip commute will be 60 minutes. There are lots of workers like you who work downtown. Since there are only a limited number of apartments near the city​ center, these apartments will be allocated based on

▼
both the costs and benefits only the benefits only the costs that you face. This process is known as
▼ "more bang for your buck" differentiation optimization .

Answer 1

Since there are only a limited number of apartments near the city​ center, these apartments will be allocated based on BOTH THE COSTS AND BENEFITS. This process is known as OPTIMIZATION.

Step-by-step explanation:

Optimization refers to calculating the change in net benefits between alternative choices, and choosing the alternative that provides the most benefits at the lowest costs.

For example, the cost of an apartment downtown will be much higher if measured as $ per square foot, but the advantage of saving 90 minutes of travel time a day might justify the extra cost.

If you are married and have children, then the extra cost of living downtown might be too high due to the amount of space needed for the whole family, therefore, it might be cheaper to spend 90 minutes a day travelling than paying an extremely high rent.