A ship travels between ports, A and B, which is a total distance of D. The cost per-hour of operating the ship is c(v) = w + v", where w > 0 represents the hourly wages of the ship's employees, v is the ship's velocity, and n 2 2 is a parameter. The objective is to choose v so that the trip is made at minimum cost. (Hint: velocity is equal to distance divided by the time taken on the trip, or what is the same, time taken is equal to distance divided by velocity) 1. Assume that v = 2. Find the expression for the indirect cost function, and consider its first two derivatives with D and with w.

A ship travels between ports, A and B, which is a total distance of D. The cost per-hour of operating the ship is c(v) = w + v", where w > 0 represents the hourly wages of the ship's employees, v is the ship's velocity, and n 2 2 is a parameter. The objective is to choose v so that the trip is made at minimum cost. (Hint: velocity is equal to distance divided by the time taken on the trip, or what is the same, time taken is equal to distance divided by velocity) 1. Assume that v = 2. Find the expression for the indirect cost function, and consider its first two derivatives with D and with w.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter3: Benefits, Costs, And Decisions

Section: Chapter Questions

Problem 3.4IP

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