Decision Sheet - Trading Traveling Time

Core Idea:
Higher automobile speed reduces driving time but also reduces gas mileage and increases
gasoline consumption. So there’s a trade-off between travelling time and gasoline.

 Travel time and gasoline are inputs into the production of automobile transportation.
 This trade-off (MRTS) is shown through isoquant.
 Isocost line shows the price of gasoline with opportunity cost of driving time.

Decision Focus:

 Finding the most economical combination of gasoline and travel time.

 This point is at the point where isocost is tanget to isoquant.