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​$175 less per month than apartments in Location​ A, apartments in Location C rent for ​$175 less than in Location​ B, and apartments in Location D rent for ​$175 less than in Location C. Suppose the value of your time is ​$24 per hour and you work 21 days per​month, with each day requiring a​ round-trip commute from your apartment to work.For​ simplicity, assume rent and the opportunity cost of your time commuting to work are the only factors influencing the location in which to rent an apartment. You should rent an apartment in Location D .Suppose you currently rent an apartment in Location B . By moving to​ optimize, you change your net benefit by ​$_____.​(Enter your response as an integer.​

Answer 1

Answer:

The correct answer is $14.

Explanation:

Location C is at 10 minutes distance from location B and location D is at 10 minutes distance from location C.

This means that location D is at 10 + 10= 20 minutes distance from location B.

A round trip will take 40 minutes

If I go to work for 21 days, the time taken in commuting will be

= $21\ \times\ 40$

= 840 minutes

or We can say it will take

= $\frac{840}{60}$

= 14 hours

The value of an hour is given as $24.

So the value of 14 hours will be

= $14\ \times\ 24$

= $336

Apartment in location D costs $175 less than the apartment in location C and apartment in location C costs $175 less than the apartment in location B.

So, the apartment in location D costs $175 + $175 = $350 less than the apartment in location B.

The net benefit of moving from location B to D is

= savings in rent - additional cost of commuting

= $350 - $336

= $14