Question

Air travel from New York to Miami costs $300 and takes 6 hours. A bus ticket between the cities costs $150 and takes 56 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be:_______.

A. $1 per hour.
B. $3 per hour.
C. $5 per hour.
D. $50 per hour.

Answer 1

B. $3 per hour

Step-by-step explanation:

Given that

Cost of air travel = $300

Time of air travel = 6 hours

Cost of bus travel = $150

Time of bus travel = 56 hours

Therefore, the extra amount paid to travel by air is

Cost of air travel - cost of bus travel

= 300 - 150

= $150.

Also, the extra time saved from air travel is

Time of bus travel - time of air travel

Given as

56 - 6

= 50 hours

Thus,

The minimum value of one's time = (extra Cost paid) ÷ (Time saved)

= $150 ÷ 50 hours

= $3 per hour