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 ​$165 less per month than apartments in Location​ A, apartments in Location C rent for $165 less than in Location​ B, and apartments in Location D rent for ​$165 less than in Location C. Suppose the value of your time is ​$16 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.

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

Location C is 10 minutes farther from B, and Location D is 10 minutes farther from C.

Therefore, Location D = 10+10 = 20 minutes

Total time from B to D and D to B = 20+20 =40 minutes. ( round -trip time)

( 21 days per) Total time per month = 21*40 = 840minutes or 14 hours (840/60)

value for one hour = $ 16 , therefore, value for 14 hours = 14*$16 = $ 224

D costs $165 less than C; C costs $165 less than for apartment in B.

Total cost $165+$165 = $330 less than B.

the net benefit of moving from B to D = $330 - $ 224 = $106