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.If the opportunity cost of time increases to $60 per hour,renting which apartment will minimize Ryan's total cost every month?
A) 2
B) 3
C) 4
D) 5

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.If the opportunity cost of time increases to $60 per hour,renting which apartment will minimize Ryan's total cost every month?
A) 2 
B) 3 
C) 4 
D) 5

Quizplus · Accepted Answer

When the opportunity cost of time increases to $60 per hour, the cost of commuting increases as well. Therefore, it makes more sense for Ryan to choose the apartment that is closest to his job, apartment 5, even though it has the highest rent of $1200 per month. The total cost for renting apartment 5 would be $1365 per month ($1200 for rent + 45 hours of commuting at $30 per hour), which is the lowest among all options.

Scenario: Ryan Wants to Rent an Apartment