core: 0o11 pt 16 of 18 (10 complete) HW Score: 33 33%, 6 of 1 Concept Question 3
ID: 1140628 • Letter: C
Question
core: 0o11 pt 16 of 18 (10 complete) HW Score: 33 33%, 6 of 1 Concept Question 3.3.3 Question Help Suppose apartments are in four locations: Location A Location B, Location C, and Location D. Location A is in the city, where your job is. Location B is 10 minutes farther from your job than Location A Location C is 10 minutes farther from your job than Location B, and Location D is 10 minutes farther than Location C. In turn similar apartments in Location B rent for S1 75 less per month than apartments in Location A apartments in Location C rent for $175 less than in Location B, and in Location D rent for $175 less than in Location C. Suppose the value of your time is $16 per hour and you work 21 days per month, with each day requiring a round-trip commute from your apartment to work. For simplicity, assume rent and the opportunity cost of your time commuting to work are the only factors influencing the location in which to rent an apartment You should rent an apartment in Location B Location D Location C Click to select your answer(s) and then click Check Answer 2 partsExplanation / Answer
Solution: It takes 20 minutes for roundtrip from apartment at location B to job location. For, 21 days, total time taken for commuting = 21*20 = 420 min or 7 hours.The value of 7 hours = 7*16 = $112. Since the rent at location B is less by $175, saving at location B = 175-112 = $63.
It takes 40 minutes for roundtrip from apartment at location C to job location. For, 21 days, total time taken for commuting = 21*40 = 840 min or 14 hours.The value of 14 hours = 14*16 = $224. Since the rent at location C is less by $350, saving at location C = 350-224 = $126.
It takes 60 minutes for roundtrip from apartment at location D to job location. For, 21 days, total time taken for commuting = 21*60 = 1260 min or 21 hours.The value of 21 hours = 21*16 = $336. Since the rent at location D is less by $525, saving at location D = 525-336 = $189.
Since saving is highest at location D, apartment should be rented in location D.
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