Refer to the table below. Given that an individual's opportunity cost of time is $30 per hour, which of the two apartments should she rent?
Apartment Monthly Commuting Time (Hours) Monthly Rent ($)
1 60 3,600
2 20 4,500
The opportunity cost of commuting per month from Apartment 1 = 60 × $30 = $1,800.
Total monthly cost of renting Apartment 1 = $1,800 + $3,600 = $5,400.
The opportunity cost of commuting per month from Apartment 2 = 20 × $30 = $600
Total monthly cost of renting Apartment 2 = $600 + $4,500 = $5,100
Therefore, the individual chooses Apartment 2 as she incurs a lower cost if she rents Apartment 2 than when she rents Apartment 1.
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