It takes one hour to travel from Manila to Laoag by air, but it takes 10 hours by bus. Airfare costs PhP2,000 and the bus fare is P800. a. For someone whose opportunity cost of travel time is PhP150, would he choose to travel by air or by land? Why? b. What if security procedures result in a 1 hour waiting time at the airport before travelling, what would happen to his decision in (a) and why? c. What if the opportunity cost of time is now PhP125? Would he choose to travel by air or by land? Why?
It takes one hour to travel from Manila to Laoag by air, but it takes 10 hours by bus. Airfare costs PhP2,000 and the bus fare is P800. a. For someone whose opportunity cost of travel time is PhP150, would he choose to travel by air or by land? Why? b. What if security procedures result in a 1 hour waiting time at the airport before travelling, what would happen to his decision in (a) and why? c. What if the opportunity cost of time is now PhP125? Would he choose to travel by air or by land? Why?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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It takes one hour to travel from Manila to Laoag by air, but it takes 10 hours by bus. Airfare costs PhP2,000 and the bus fare is P800.
a. For someone whose opportunity cost of travel time is PhP150, would he choose to travel by air or by land? Why?
b. What if security procedures result in a 1 hour waiting time at the airport before travelling, what would happen to his decision in (a) and why?
c. What if the opportunity cost of time is now PhP125? Would he choose to travel by air or by land? Why?
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