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
?

Answer 1

Answer:

$3 per hour

Explanation:

Data provided in the question:

Cost of air travel, C = $300

Time for Air travel, T = 6 hours

Cost of bus ticket, c = $150

Time for bus ticket, t = 56 hours

Now,

The Extra amount paid for the air travel = $300 - $150

= $150

Time saved from the Air travel = 56 - 6 = 50 hours

Therefore,

The minimum value of one's time = [Cost paid] ÷ [Time saved ]

= $150 ÷ 50

= $3 per hour