Assign1 - James E. Pesando Economics 100 Assignment #1 The...

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James E. Pesando Economics 100 Assignment #1 The Economic Way of Thinking (Marginal Analysis and Opportunity Cost) 1. You are planning a trip to Ottawa, which is 400 miles. Except for the cost, you are completely indifferent between driving and taking the bus. The bus ticket costs $180. You do not know how much it would cost to drive your car, so you call Hertz for an estimate. The person you speak with tells you that for your make of car, the costs of a typical 10,000 mile driving year are as follows: Insurance $2000 Financing (Interest) 1500 Fuel & Oil 1500 Maintenance 2000 Total $7000 A non-economist calculates that these costs sum to $0.70/mile and uses this figure to compute that the 400 mile trip will cost $280 by car. The non- economist concludes that you should take the bus, because it is cheaper. 1 (a) Is the calculation performed by the non-economist correct? Should you decide to take the bus or drive your car? 0
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This note was uploaded on 03/02/2010 for the course ECO ECO100 taught by Professor Inheart during the Spring '09 term at University of Toronto.

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Assign1 - James E. Pesando Economics 100 Assignment #1 The...

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