The opportunity cost of an airplane flight:
a. differs across passengers only to the extent that each traveler pays a different airfare
b. is identical for all passengers and equal to the number of hours a particular flight takes.
c. differs across passengers to the extent that both airfares paid and the highest valued use of travel time vary.
d. is equal to the cost of a bus ticket, the next best form of alternative transportation to flying.
c
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Which of the following is a liability of a commercial bank?
a. Property and buildings owned b. Loans c. Government bonds held d. Cash in its vault e. Deposits at the bank
If the real interest rate is 5%, the rate of inflation in the United States is 6%, and the rate of inflation in the United Kingdom is 3%, which of the following statements would NOT be true?
A) The nominal rate of interest in the United States would be greater than the nominal interest rate in the United Kingdom. B) The difference between the U.K. and U.S. interest rates is a function of the difference between their inflation rates. C) The nominal rate of interest in the United States and the United Kingdom would be the same because of purchasing power parity. D) Investors would get a higher return on their money in the United States.