# Microeconomics question

• Aug 28th 2011, 10:30 PM
Foxglove
Microeconomics question
Hi there,

I want to know how I would set up this problem. I've been thrown into a Microeconomics class and it's been years since I've had any experience with opportunity cost equations. Could I possibly get some help with how to work this?

Suppose there are two ways of traveling from Boston to DC. The Megabus costs \$25 each way and takes 4 and 1/2 hours. The Amtrak costs \$100 and takes three hours. Different travelers may value their time differently (for instance, one traveler may value his time at \$100 per hour, and another at \$20 per hour). What time valuation (per hour) would make a traveler indifferent to the two bus options?
• Aug 29th 2011, 03:47 AM
SpringFan25
Re: Microeconomics question
suppose my opportunity cost of time wasted is \$x per hour.

The cost of the megabus ticket is:
Direct cost: 25
Opportunity cost: 4.5x
Total cost: 25 + 4.5x

do the same thing for the other ticket, then find the value of x that makes the total cost of both options equal.

PS: i assume he is travelling one way. although if you work it through im pretty sure that wont affect the final answer.
• Aug 29th 2011, 08:50 AM
Foxglove
Re: Microeconomics question
Quote:

Originally Posted by SpringFan25
suppose my opportunity cost of time wasted is \$x per hour.

The cost of the megabus ticket is:
Direct cost: 25
Opportunity cost: 4.5x
Total cost: 25 + 4.5x

do the same thing for the other ticket, then find the value of x that makes the total cost of both options equal.

PS: i assume he is travelling one way. although if you work it through im pretty sure that wont affect the final answer.

Yay! Thank you! I never would have thought of that. So I just set 25 + 4.5x equal to 100 + 3x to get x = 50?