### Problem DescriptionTwo manufacturing firms, located in cities 90 miles apart, both send their trucks four times a week to the other city full of cargo and return empty. Each driver costs $275 per day with benefits (the round trip takes all day), and each firm has truck operating costs of $1.20 per mile.### Questions#### (a) Transportation Savings**How much could each firm save weekly if each sent its truck twice a week and hauled the other firm's cargo on the return trip?**#### (b) Emission Tax Savings**What would the savings be if there was a $0.20 per mile emissions tax on all business truck travel?**---### Detailed Explanation:#### Question (a) Analysis1. **Current Trip Configuration** - Distance between cities: 90 miles one way - Round trip: 90 miles * 2 = 180 miles - Total trips per week per firm: 4 - Total trips per week for both firms: 4 * 2 = 82. **Costs** - Driver cost per trip: $275 - Truck operating cost per mile: $1.20 - Total operating cost per trip: 180 miles * $1.20 = $216 - Total cost per trip: $275 (driver) + $216 (operating) = $4913. **Total Weekly Costs** - Total cost per firm per week: $491 * 4 = $1964 - Total cost for both firms per week: $1964 * 2 = $39284. **Proposed Trip Configuration** - Each firm sends trucks twice a week - Each truck hauls the other firm’s cargo on the return trip - Total trips per week for both firms: 2 * 2 = 45. **Proposed Total Weekly Costs** - Total cost per firm per week: $491 * 2 = $982 - Total cost for both firms per week: $982 * 2 = $19646. **Savings Calculation** - Weekly savings per firm: $1964 (current) - $982 (proposed) = $982 - Total weekly savings for both firms: $3928 - $1964 = $1964#### Question (b) Analysis1. **Introduction of $0

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1-55 Two manufacturing firm, located in cities 90 miles G apart, both send their trucks four times a week to the other city full of cargo and return empty. Each driver costs $275 per day with benefits (the round trip takes all day) and each firm has truck operating costs of $1.20 a mile. (a) How much could each firm save weekly if each sent its truck twice a week and hauled the other firm's cargo on the return trip? (b) What would the savings be if there was a $0.20 per mile emissions tax on all business truck travel?

1-55 Two manufacturing firm, located in cities 90 miles G apart, both send their trucks four times a week to the other city full of cargo and return empty. Each driver costs $275 per day with benefits (the round trip takes all day) and each firm has truck operating costs of $1.20 a mile. (a) How much could each firm save weekly if each sent its truck twice a week and hauled the other firm's cargo on the return trip? (b) What would the savings be if there was a $0.20 per mile emissions tax on all business truck travel?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

### Problem Description

Two manufacturing firms, located in cities 90 miles apart, both send their trucks four times a week to the other city full of cargo and return empty. Each driver costs $275 per day with benefits (the round trip takes all day), and each firm has truck operating costs of $1.20 per mile.

### Questions

#### (a) Transportation Savings

**How much could each firm save weekly if each sent its truck twice a week and hauled the other firm's cargo on the return trip?**

#### (b) Emission Tax Savings

**What would the savings be if there was a $0.20 per mile emissions tax on all business truck travel?**

---

### Detailed Explanation:

#### Question (a) Analysis

1. **Current Trip Configuration**
- Distance between cities: 90 miles one way
- Round trip: 90 miles * 2 = 180 miles
- Total trips per week per firm: 4
- Total trips per week for both firms: 4 * 2 = 8

2. **Costs**
- Driver cost per trip: $275
- Truck operating cost per mile: $1.20
- Total operating cost per trip: 180 miles * $1.20 = $216
- Total cost per trip: $275 (driver) + $216 (operating) = $491

3. **Total Weekly Costs**
- Total cost per firm per week: $491 * 4 = $1964
- Total cost for both firms per week: $1964 * 2 = $3928

4. **Proposed Trip Configuration**
- Each firm sends trucks twice a week
- Each truck hauls the other firm’s cargo on the return trip
- Total trips per week for both firms: 2 * 2 = 4

5. **Proposed Total Weekly Costs**
- Total cost per firm per week: $491 * 2 = $982
- Total cost for both firms per week: $982 * 2 = $1964

6. **Savings Calculation**
- Weekly savings per firm: $1964 (current) - $982 (proposed) = $982
- Total weekly savings for both firms: $3928 - $1964 = $1964

#### Question (b) Analysis

1. **Introduction of $0

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