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).
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.
Read the Washington Post story hereLinks to an external site..
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.
