Page Litton likes to use her credit card to buy gas since she can defer payment for 30 days. However, she notices that her dealer charges 3 cents more per gallon than if she paid with cash

Page estimates paying about $1.00 a gallon for gas, and her monthly credit statement shows an APR of 18 %. Given this information, Page should
A)

continue using her card since the opportunity cost of paying in cash is less than 18% a year.
B)

pay with cash since its opportunity cost is about 36% a year.
C)

continue using her card, the effective cost of using cash is about 36% a year.
D)

you can't tell unless you know how much gas she will buy.


B

Business

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