Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 7, Problem 5MC
To determine
Diseconomies of scale.
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A toll road commission is planning to locate garages for tow trucks along a 94-mile circular highway. Each garage has a fixed cost of
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Chapter 7 Solutions
Managerial Economics: A Problem Solving Approach
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- suppose a company has two production facilities with two different TC functions. in facility A total costs are given by $600,000+0.4Q^2 in facility B total costs are given by $300,000+0.5Q^2 The firm needs to produce 900 units how many units should they produce in facilities a and b to minimize total costsarrow_forwardQUESTION 1: Calculate a plant's total cost for every day in the data, in dollars. Total cost is defined as: total_cost = total_raw_materials_cost + total_operating_cost + total_labor_cost. Which plant is the most expensive to operate, and what is the cost to operate the plant? QUESTION 2: Which cost source (or combination of sources) makes up the majority of a plants total expenditures? raw material, labor, operating, or no cost is consistently the majority of total cost across plants QUESTION 3: Calculate cost efficiency, defined as how much money is spent to produce 1 pound of release ease (i.e. total production/cost). Which plant is the least cost efficient, in lbs of release ease produced per dollar spent? What is the daily average efficiency for the plant that is most efficient? link to excel data:https://docs.google.com/spreadsheets/d/1PM9rh2DnEdKQqCjJM1cmVjcP7_YSdA0y/edit?usp=sharing&ouid=109691244462343090665&rtpof=true&sd=truearrow_forwardQ2. Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has a determined that if a truck is driven 105,000 kilometers during a year, the average operating cost is 11.4 cents per kilometers. If a truck is driven only 70,000 kilometers during a year, the average operating cost increases to 13.4 cents per kilometer. (The Singapore dollar is the currency used in Singapore). a. Using the high-low method, estimating the variable and fixed cost elements of the annual cost of the truck operation. b. Express the variable and fixed costs in the form Y= a + bx. c. If a truck were driven 80,000 kilometers during a year, what total cost would you expect to be incurred?arrow_forward
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