An individual works downtown and pays $600 per month in rent for an apartment located 10 miles from her office. She has calculated that she spends 30 minutes per day driving each way to the office and it costs her $4 per day in gas and lost productivity. Using the framework of the bid-rent model, how much would she be willing to pay for an apartment downtown, assuming a 20 workday month? a. $440.
b. $680.
c. $520.
d. $80.

b. $680

Explanation:

Calculation to determine how much would she be willing to pay for an apartment downtown, assuming a 20 workday month

First step to determine the Cost of commuting using this formula

Cost of commuting = Cost of gas and productivity × 20 workday month

Let plug in the formula

Cost of commuting =$4*20

Cost of commuting =$80

Now let determine how much would she be willing to pay for an apartment

Using this formula

Amount willing to pay= Total rent + Cost of commuting

Let plug in the formula

Amount willing to pay= $600 + $80

Amount willing to pay= $680

Therefore how much would she be willing to pay for an apartment downtown, assuming a 20 workday month is $680

answer: b. false

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