### The traveler opportunity cost of time spent in transit

##### Reference no: EM131424674

It takes 1 hour to travel from New York to Washington D.C. by air and 8 hours by bus. The airfare is \$190 and the busfare is \$35. If a traveler wishes to minimize the total cost of making this trip, which mode of transportation should be selected if the traveler’s opportunity cost of time spent in transit is \$10 per hour?

#### Economic principles of taxation

State two economic principles of taxation and which principle best justifies the excise tax on gasoline, when the tax revenue is used to maintain or improve the roads.

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