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27 November, 00:46

Maria has to choose between driving and taking a train to destination A. Travelling by train will cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour.

Which of the following statements is true?

A. Maria should choose to drive as it saves her $150

B. Maria should choose to travel by train as it saves her S150 °

C. Maria should choose to travel by train as it saves her $10.

D. Mana should choose to drive as t saves her $10

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Answers (1)
  1. 27 November, 02:28
    0
    None of the options are correct

    Explanation:

    The train would cost her, which is computed as:

    = Cost + (Hours * Opportunity Cost)

    = $400 + (4 hours * $15 per hour)

    = $400 + $60

    = $460

    The driving would cost her, which is computed as:

    = Cost + (Hours * Opportunity Cost)

    = $250 + (6 hours * $15 per hour)

    = $250 + $90

    = $340

    Savings = Train Cost - Driving Cost

    = $460 - $340

    =$120

    None of the options are correct as the she would save $120.
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