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Opportunity cost of your resource is defined as "the value associated with the next best use of that resource (which you must give up)." Decisions you make should reflect your opportunity cost, and not just your out-of-pocket costs. For example, if you decide to spend two hours of your time watching TV, the opportunity cost of your time is the value associated with its next best use (either studying or sleeping).

This exercise will ask you to relate this concept to decision making.

When the I-395 Express Lanes first opened in November 2019, the toll was expected to reach up to $30 for drivers in the Northbound lanes to travel a distance of only 8 miles during the morning rush hour.
WASHINGTON POST STORY: https://www.washingtonpost.com/local/trafficandcommuting/tolling-on-395-express-lanes-starts-sunday-heres-what-you-need-to-know/2019/11/16/07742088-07d4-11ea-818c-fcc65139e8c2_story.html
Using the principles of Opportunity Cost and Rational Decision Making, explain why (or why not) drivers might be willing to pay up to $30 to save 30 minutes of travel time during the rush hour.

Respuesta :

According to the principle of opportunity cost, drivers might be willing to pay up to $30 to save 30 minutes of travel time during the rush hour of it will lead to a bigger gain and is advantageous

What is opportunity cost?

When weighing several investments or business opportunities, opportunity cost is defined as the potential gain lost by choosing an alternative course of action.

The apparent advantage of not selecting the next best alternative when resources are limited is known as the opportunity cost.

Opportunity costs are not just financial or monetary costs. An opportunity cost is also the actual cost of lost productivity, lost time, or any other for-profit gain.

It should be noted that according to the principle of opportunity cost, drivers might be willing to pay up to $30 to save 30 minutes of travel time during the rush hour of it will lead to a bigger gain and is advantageous. This was illustrated based on the information given.

Learn more about opportunity cost on:

https://brainly.com/question/1549591

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