Answer to Question #25235 in Microeconomics for lulu
Larry, when he is not traveling, can work and earn $30/hour
= $30 + (5 hours) ($30/hour)
= $30 + $150 = $180
OC = $90 + (1 hour)($30) = $120
Plane is cheaper for Larry
OC (bus) = $30 + (5 hours)($6/hour) = $60
OC (plane) = $90 + (1 hour) ($6/hour) = $96
Therefore, bus is cheaper for Moe.
People with high time value (e.g. busy executives) are more likely to travel by
plane than by bus; whereas, people with low time value (seniors, students on
vacation) are more likely to travel by bus.
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