Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour.

-Refer to the scenario above.The total cost per month is the lowest if Ryan chooses to rent Apartment ________.
A) 1
B) 2
C) 3
D) 4

Question

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour.
 
-Refer to the scenario above.The total cost per month is the lowest if Ryan chooses to rent Apartment ________.
A) 1 
B) 2 
C) 3 
D) 4

Quizplus · Accepted Answer

To calculate the total cost for each apartment, we add the monthly rent to the commuting cost, which is opportunity cost per hour multiplied by the number of hours to commute to work. The total costs are:

Apartment 1: $900 + ($15 × 8) = $1020
Apartment 2: $1000 + ($15 × 3) = $1055
Apartment 3: $800 + ($15 × 10) = $950
Apartment 4: $1100 + ($15 × 4) = $1160
Apartment 5: $1200 + ($15 × 12) = $1380

Therefore, the best choice is Apartment 2 with a total cost of $1055, which is the lowest among all the options.

Scenario: Ryan Wants to Rent an Apartment