Two methods to control newly discovered poisonous weeds in bar-ditches on the sides of county roads in New Farmendale are under consideration. Method A involves use of a 20-year life lining at an initial cost of $14,000 and an annual maintenance cost of $3 per kilometer (km). Method B involves spraying a chemical that costs $40 per liter. One liter will treat 8 km, but the treatment must be applied four times per year. In determining the number of km per year that would result in breakeven, the variable cost for method B is closest to: (a) $5 per km (b) $15 per km (c) $20 per km (d) $40 per km
Two methods to control newly discovered poisonous weeds in bar-ditches on the sides of county roads in New Farmendale are under consideration. Method A involves use of a 20-year life lining at an initial cost of $14,000 and an annual maintenance cost of $3 per kilometer (km). Method B involves spraying a chemical that costs $40 per liter. One liter will treat 8 km, but the treatment must be applied four times per year. In determining the number of km per year that would result in breakeven, the variable cost for method B is closest to: (a) $5 per km (b) $15 per km (c) $20 per km (d) $40 per km
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Two methods to control newly discovered poisonous
weeds in bar-ditches on the sides of county
roads in New Farmendale are under consideration.
Method A involves use of a 20-year life lining
at an initial cost of $14,000 and an annual
maintenance cost of $3 per kilometer (km).
Method B involves spraying a chemical that costs
$40 per liter. One liter will treat 8 km, but the
treatment must be applied four times per year. In
determining the number of km per year that
would result in breakeven, the variable cost for
method B is closest to:
(a) $5 per km
(b) $15 per km
(c) $20 per km
(d) $40 per km
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