Chapter 1, Problem 1P

To determine

Decision making.

Explanation of Solution

Total saving (S) from the trip can be calculated as follows.

$\begin{array}{c}\text{S}=\frac{\left(\text{Total gas}\times \text{Savings}\right)-\left(\text{Total lb}\times \text{Cost per lb}\right)}{\text{Total lb}}\\ =\frac{\left(\text{15}\times \text{0}\text{.1}\right)-\left(\text{8}\times \text{0}\text{.2}\right)}{8}\\ =0.1673\end{array}$

Total saving after imposing the cost is $0.1673 per mile. If the cost of travel is less than the $0.1673 per mile, then the person can take the trip. The cost of gasoline for the travel is $1.25$\left(\frac{8}{25}\times 3.9\right)$. Other than the gasoline cost, should consider the insurance cost, maintenance cost and depreciation cost.