#### Question

Identify each of the following costs associated with owning an automobile as direct or indirect (assume a direct cost is one that is directly attributable to the number of miles driven): license plate, driver’s license, gasoline, highway toll fee, oil change, repairs after collision, gasoline tax, monthly loan payment, annual inspection fee, and garage rental.

#### Solution

Verified#### Step 1

1 of 2(a) license plate - not affected by the number of miles driven - $\textbf{indirect}$

(b) drivers license - not affected by the number of miles driven - $\textbf{indirect}$

(c) gasoline - the cost rises proportionally to the number of miles driven - $\textbf{direct}$

(d) highway toll fee - the cost rises with the number of miles driven - $\textbf{direct}$

(e) oil change - frequency depends on number of miles driven - $\textbf{direct}$

(f) repairs after collision - not affected by the number of miles driven - $\textbf{indirect}$

(g) gasoline tax - rises proportionally to the cost of gasoline and the number of miles driven - $\textbf{direct}$

(h) monthly loan payment - not affected by the number of miles driven - $\textbf{indirect}$

(i) annual inspection fee - not affected by the number of miles driven - $\textbf{indirect}$

(j) garage rental - not affected by the number of miles driven - $\textbf{indirect}$