The average price of gasoline in your neighborhood is $3.53 per gallon. Your neighbor Diana tells you that you can "save a lot" by frequenting a gas station 20 miles outside your neighborhood where the price of gasoline is $3.46 per gallon However, she cautions you that there usually long lines at that station. Is her suggestion beneficial to you?
A) Yes, since gasoline is a necessity for car owners, the total cost savings would be relatively substantial.
B) No, if one factors in the non-monetary opportunity costs (driving time and waiting in line), it could prove more costly to go to the lower-priced gasoline station.
C) Yes, the lower price of gasoline at the rival station increases my purchasing power and enables me to consume more of other goods.
D) No, my friend is misled; clearly, the lower priced gasoline must be of inferior quality and could damage vehicles.

Question

Quizplus · Accepted Answer

While the lower price of gasoline may seem financially beneficial, one must also consider the opportunity cost of traveling 20 miles and waiting in long lines. Depending on the specific circumstances, this could end up costing more overall. Furthermore, there is no indication that the lower-priced gasoline is of inferior quality.

The Average Price of Gasoline in Your Neighborhood Is $3