The cost function of a large railroadcorporation is Y=10^7+T, where Y is thetotal cost of shipping in U.S. dollars and T isthe tons shipped. Last year the companycharged on average 90 cent for each ton offreight. Their annual shipments totaled 50million tons. This year they are consideringgeographical expansion through thepurchase of a smaller railroad corporationthat last year shipped a total of 22 milliontons. Economists estimated that the totalcost function (for the merged corporations)will be Y=20^7+0.1T, while 10% morefreight should be expected due to thebetter geographic coverage, at a pricediscounted by 10 cents. a) Which railroadrealizes greater EOS? Use a numericalexample or a graphic for proof. b) Shownumerically that the large railroad shouldmerge with the smaller one (calculate costvs. revenue).

The cost function measures the minimum cost of producing a certain level of output for a certain…

The cost function of a large railroad corporation is Y=10^7+T, where Y is the total cost of shipping in U.S. dollars and T is the tons shipped. Last year the company charged on average 90 cent for each ton of freight. Their annual shipments totaled 50 million tons. This year they are considering

The cost function of a large railroad corporation is Y=10^7+T, where Y is the total cost of shipping in U.S. dollars and T is the tons shipped. Last year the company charged on average 90 cent for each ton of freight. Their annual shipments totaled 50 million tons. This year they are considering

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please answer question 6 with details on how to do it. Thank you.
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