Dr. Jones, a dentist, is choosing between driving and flying from Pittsburgh to New York City. If Jones drove, she would have to close her office four hours earlier than if she flew by airplane. Her expected income (after taxes) from her practice is $50 per hour. Assuming all other factors are equal, if Jones was a rational decision maker, she would drive if the price differential (air cost minus driving) was greater than
A) $50.
B) $100.
C) $150.
D) $200.

Question

Quizplus · Accepted Answer

If Dr. Jones closes her office four hours earlier by driving, she loses 4 hours x $50/hour = $200 in income. Therefore, she would drive if the cost savings from driving is greater than $200.

Dr Jones, a Dentist, Is Choosing Between Driving and Flying