Question

If you rent a​ car, you can​ (1) return it with a full gas​ tank, (2) return it without filling it and pay ​$3.65/gallon, or​ (3) accept a fixed price of $29 for gas. The local price is $2.65​/gallon for​ gasoline, and you expect this car to get 28 miles per gallon. The car has a​ 20-gallon/tank. What choice should you make if you expect to drive 178 ​miles?

​a) What is the total gas cost for option 1 or 2? (nearest cent)

​b) According to your​ calculations, what option should you​ choose?

Answer 1

a) Total gas cost for option 1 would be (20 x $2.65) $53. As the car has a 20-gallon tank filling it to the full will cost $53.

The second option, we are driving it for 178 miles and the car can travel 28 miles in a gallon. We will be using 6.35 gallons of oil for the journey. it will cost up only (6.35 x 3.65) $23.17 for the journey.

The third option is to pay $29 for gas.

b) As we are benefiting the most from the second option we will choose it. In the second option, we are paying only $23.17 as compared to $53 and $29 in other options.