A Consumer Has Two Basic Choices in Making a Trip

question 113

Multiple Choice

A consumer has two basic choices in making a trip: rent a car for $30.00 a day and spend two days of travel to the destination, or spend $400 for an airplane ticket and fly to the destination in two hours. The marginal utilities of the car rental and the airline ticket are the same. The consumer values time at $5 an hour. The rational consumer will most likely

• A) rent a car.
• B) buy an airline ticket.
• C) find the full cost of the two modes to be equal.
• D) not make the trip.

---

Definitions:

Identical Product

Goods or services that are exactly the same in quality, size, and specifications, making them indistinguishable from one another to consumers.

Making a Profit

The financial gain realized when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in maintaining the operation.

Taking a Loss

A situation where the sale price of an asset is less than its purchase price, resulting in a financial loss for the seller.

Peak Efficiency

The optimal point of production or operation at which an entity is utilizing its resources most effectively, without waste.