Suppose apartments are in four locations: Location A, Location B, Location C, an
ID: 1149138 • Letter: S
Question
Suppose apartments are in four locations: Location A, Location B, Location C, and Location D. Location A is in the city, where your job is. Location B is 10 minutes farther from your job than Location A. Location C is 10 minutes farther from your job than Location B, and Location D is 10 minutes farther than Location C. In turn, similar apartments in Location B rent for $195 less per month than apartments in Location A, apartments in Location C rent for $195 less than in Location B, and apartments in Location D rent for $195 less than in Location C. Suppose the value of your time is $20 per hour and you work 21 days per month, with each day requiring a round-trip commute from your apartment to work. For simplicity, assume rent and the opportunity cost of your time commuting to work are the only factors influencing the location in which to rent an apartment. You should rent an apartment in Location D Location C Location D Location A Location B . Suppose you currently rent an apartment in Location Upper B . By moving to optimize, you change your net benefit by $110 .
For simplicity, assume rent and the opportunity cost of your time commuting to work are the only factors influencing the location in which to rent an apartment.
You should rent an apartment in?
.
Suppose you currently rent an apartment in Location B.
.
By moving to optimize, you change your net benefit by?
$
Explanation / Answer
First of all we need to summarize the whole thing. There are 4 apartments A, B, C and D. Every apartment is 10 minutes located in frequent distant from your work place as we move forward the time duration also increases.
In the same manner the rent for my apartment B rent for the location in apartment B $195 less than in apartmen A.
OPPORTUNITY COST is the best next alternative.
The value of my time is $20 per hour and work 21 days a month. It is pretty much obvious that to rwach the office I regularly have to commute a transport to round in office and apartment. I feel apartment B and C is the appropriate choice for me since the value I warn and could invest on rent should be at a mediate level irrespective of the other expenses like transport, additional cost for househlld chores etc.
By moving to the right place I would be able to make use of the best alternative.