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20 November, 22:07

Suppose the price of an airline ticket from dallas to boston costs $600. a bus ticket costs $150. traveling by plane takes 6 hours compared with 51 hours by bus. other things constant, an individual would gain by choosing air travel if, and only if, his time were valued at more than how much? show your work.

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  1. 20 November, 22:28
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    Price of the plane ticket = $600

    Price of the bus ticket = $150

    Additional money for plane ticket = 600-150 = $450

    Time taken by air travel = 6 hours

    Time taken by bus travel = 51 hours

    Time saved by air travel = bus travel time - air travel time = 51-6 = 45 hours

    So, for savings 45 hours, you spend $450 more for the plane travel

    So the individual would only gain if his value is time is greater than Amount spend on plane/saved time

    So the individual would only gain if his value is time is greater than $450/45 hr=$10/hr

    Other things constant, an individual would gain by choosing air travel if, and only if, his time were valued at more than $ 10 per hour
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