Mr. Peters can drive or fly from Tallahassee, Florida to Savannah, Georgia, for a one-day business trip. If he drives, he will be able to work three hours once he arrives in Savannah, whereas traveling by plane will enable him to work eight hours. His expected income from each hour of work in Savannah is $30. If Mr. Peters is a rational decision maker, he will fly if and only if the price differential (air cost minus driving cost) is less than

Question

Quizplus · Accepted Answer

Mr. Peters will fly if the additional income from flying (5 extra hours of work at $30 per hour) is greater than the additional cost of flying. This means the price differential should be less than $150 (5 hours x $30/hour).

Mr Peters Can Drive or Fly from Tallahassee, Florida to Savannah