Question

Suppose Mike wants to go elk hunting. The following are examples of the direct costs and the travel costs of going elk hunting.

Miles Traveled One Way: 200

Cost Per Mile: $0.10

Hours Traveled One Way: 3 Hours

Mike's Hourly Wage: $50

Cost of Elk Tag: $800

What is Mike's travel cost associated with elk hunting?

If Mike decided not to go elk hunting, what does that reveal about the value of elk hunting for him?

Answer 1

Total cost of miles traveled = 200* 2 *0.1 = $40

Wage forgone during the period of travel = 3*2*50 = $300

Cost of Elk Tag = $800

So the total travel cost = Total cost of miles traveled + Wage forgone during the period of travel = $40 + $300 = $340

Total cost of elk hunting = $340 + $800 = $1,140

Had he not gone to elk hunting it would have revealed about his preference for labor over leisure. This means that the cost of elk hunting is more than the income earned by providing labor during the same hours which he would have spent while travelling.