Question

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

Answer 1

The individual would gain by choosing air travel if, and only if, his time were valued at more than $10 per hour.

Explanation

Cost of airline ticket = $600 and cost of bus ticket = $150

So, the money saved = $600 - $150 = $450

Now,  traveling by plane takes 6 hours compared with 51 hours by bus. So, extra travel time = (51 - 6) hours = 45 hours

Thus,

(Money saved / Extra travel time) $= \frac{450}{45}= 10$ dollar/hour

So, the individual would gain by choosing air travel if, and only if, his time were valued at more than $10 per hour.