Question

In: Finance

Question 1 A local government board hired you to recommend which of the two possible sites...

Question 1

A local government board hired you to recommend which of the two possible sites should be chosen for a new recycling facility. Location A is much closer to the city center, and thus the average hauling distance would only be 2 miles, while Location B being outside of the city would result in an average hauling distance of 5 miles. Public funds will have to be used to pay for the leasing cost of the site, which would be $50,000 a year for Location A and $10,000 a year for Location B, as well as for the hauling cost which is $200 per mile for each trip. Assuming 3,000 trips will be made per year, which location should be chosen based on the overall cost?

Question 2 :

Metal ABC produces sheets of metal. Its fixed cost in year 2019 is $1,000,000. The variable cost is $400 per sheet. a. Find the break-even quantity assuming the selling price is $500 per sheet. b. Find the price and quantity that will result in maximum profit, assuming the demand function is ? = $10,000 − 6?. How much profit will be made using the profit-maximizing price and quantity values?

Expert Solution

Answer 1

Location A

Leasing cost =$50,000 per year

Hauling cost = No of trips * Distance* cost per trip per mile = 3000*2*200=1,200,000

Total Cost = 50000+1200000=$1,250,000

Location B

Leasing cost =$10,000 per year

Hauling cost = No of trips * Distance* cost per trip per mile = 3000*2*500=3,000,000

Total Cost = 10000+3000000=$3,010,000

Hence Location A is Chosen

Answer 2

Let the break even quantity be x

Then Variable cost = 400*x =400x

Revenue = 500*x=500x

At break even, Revenue = Fixed cost+ variable cost

Hence, 500x=400x+1000000

or, 500x-400x=1000000

or, 100x =1000000

or, x = 1000000/100=10000 units

Hence break even units is 10000

For Q units, P=10000-6Q

Revenue = (10000-6Q)*Q=10000Q-6Q²

Cost = 1000000+400Q

Hence Profit = Revenue-Cost = 10000Q-6Q² -1000000-400Q = -1000000+9600Q-6Q²

For maximum Profit dP/dQ=0

Hence d/dQ(-1000000+9600Q-6Q²)=0

or, 9600-6*2Q=0

or, 12Q=9600

or, Q=9600/12=800 units

P=10000-6Q = 10000-6*800 =10000-4800=$5200

Hence Profit maximization Q=800 units and P=$5200

Profit = -1000000+9600*800-6*800² = -1000000+7680000-6*640000=6680000-3840000=$2840000

jeff jeffy answered 6 months ago

v Question #1: Suppose that you are the economic advisor to a local government that has...

v Question #1: Suppose that you are the economic advisor to a local government that has to deal with a politically embarrassing surplus that was caused by a price floor that the government recently imposed. Your first suggestion is to get rid of the price floor, but the politicians don’t want to do that. Instead, they present you with the following list of options that they hope will get rid of the surplus while keeping the price floor. Identify each...

What would you recommend to the CEO and Board as to how to more fully apply...

What would you recommend to the CEO and Board as to how to more fully apply a population health model and positively impact the health of the community and control costs at the same time (The Triple Aim)?

Question 1: You have been hired by UrTaxi - a taxi service company in Brisbane which...

Question 1: You have been hired by UrTaxi - a taxi service company in Brisbane which drives customers home in drivers’ personal cars. Customers currently phone in to book a driver and pay cash on arrival. The current system is a simple spreadsheet with a basic AIS. UrTaxi have decided it was time to go online and they would like customers to register online and book and pay for their trips online. The CEO of the business would like to...

Question 1 Think about the goods and services provided by your local government. a) The classification...

Question 1 Think about the goods and services provided by your local government. a) The classification in Figure 1 in Chapter 11 of the prescribed textbook by Mankiw, explain which category each of the following goods falls into: i. Police protection ii. Education iii, Rural roads iv City streets b) Why do you think the government provides items that are not (pure) public goods? Question 2 “People often throw out plastic bags and cigarette butts along the roads or highways,...

Question 1 In the framework of monopolistic competition, which of the following is not a possible...

Question 1 In the framework of monopolistic competition, which of the following is not a possible outcome for a firm that runs a successful advertising campaign? Select the correct answer below: allocative efficiency the ability of the firm to charge a higher price the ability of the firm to sell a greater quantity an increase in profits for the firm Question 2 In a market characterized by monopolistic competition, how will new firms choose to engage this market? Select the...

The controller of a local firm that uses a continuous production process asks you to recommend...

The controller of a local firm that uses a continuous production process asks you to recommend whether the company use weighted-average or FIFO process costing. What factors would you consider making a recommendation?

You are hired as the superintendent in a local student district, and you have to decide...

You are hired as the superintendent in a local student district, and you have to decide how to allocate money between textbooks and computers. A. What is the optimal allocation rule you should follow when deciding how many textbooks and computers to provide? B. Suppose the price of computers decreases. How does the optimal allocation of computers change? Assume that both textbooks and computers have diminishing marginal returns. Use the optimal allocation rule as a guide.

Write a complete program (possible to compile) that: 1) declares two local integers x and y...

Write a complete program (possible to compile) that: 1) declares two local integers x and y 2) defines a global structure containing two pointers (xptr,yptr) and an integer (z) 3) Declares a variable (mst) by the type of previous structure 4) requests the values of x and y from the user using only one scanf statement 5) sets the first pointer in the struct to point to x 6) sets the second pointer in the struct to point to y...

Politics Question Although government from the state to the local level is clearly unitary, local finance...

Politics Question Although government from the state to the local level is clearly unitary, local finance is very diverse, with many local levies and revenue streams. Should states abolish all local taxes and institute more efficient tax reforms? Why/why not?

Question 4 The Government Schools Board is inviting tenders for a contract to provide IT services...

Question 4 The Government Schools Board is inviting tenders for a contract to provide IT services to schools. A panel of senior managers from the Schools Board will assess the tenders and recommend a preferred tenderer to the Head of the Education Department. Part a) Suppose there are two tenders received with the following data: Tender 1 (Whatis) Tender 2 (Hacker) Costs Year 1 $250,000 $350,000 Costs year 2 $250,000 $250,000 Costs year 3 $250,000 $150,000 Government departments use a...