Suppose a roll of paper towels costs $5 at Sam's Quick Stop, a local quick stop, and the same roll of paper towels costs $2 at Big Supplies, a large, retailer located in a more remote location. If a customer's total cost of travel to Sam's Quick Stop is $3 and is $6 to Big Supplies, which of the following is true?
A)It is more expensive for the consumer to buy the paper towels at Big Supplies.
B)It is cheaper for the consumer to buy the paper towels at Sam's Quick Stop.
C)The consumer is indifferent as to where they buy the paper towels.
D)It is cheaper for the consumer to buy the paper towels at Big Supplies.

Question

Quizplus · Accepted Answer

The total cost for buying at Sam's Quick Stop is $5 (cost of paper towels) + $3 (travel cost) = $8. The total cost for buying at Big Supplies is $2 (cost of paper towels) + $6 (travel cost) = $8. Therefore, the total cost to the consumer is the same for both options, making the consumer indifferent as to where they buy the paper towels.

Suppose a Roll of Paper Towels Costs $5 at Sam's