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You just bought a motorcycle for $8,000. You plan to ride the motorcycle for two years, and then sell it for $3,200. During this two-year period, you expect to ride the motorcycle 10,000 miles each year, and you expect the motorcycle to get 50 miles per gallon of gasoline. The annual cost of insurance is $960, registration costs are $80 (good for two years), and the price of gasoline is $2.50 per gallon. During this same two-year period, you will need to service your motorcycle five times, at $240 per service check, and obtain five oil changes. Each oil change costs $35. You will also need to replace your tires once during this two-year period, for a total cost of $40. a. Calculate the total fixed cost, total variable cost, and cost per mile for the two-year period, and then complete the table below. Instructions: Round your answers for total fixed cost and total variable cost to the nearest whole number. Round your answer for cost per mile to two decimal places. Total Fixed Cost Total Variable Cost Cost per Mile $ $ $ b. Suppose you want to lower the cost per mile. You should focus on: O variable costs, because they can be avoided. O fixed costs, because they represent a majority of the total costs. O variable costs, because they represent a majority of the total costs. O fixed costs, because they must be paid.

You just bought a motorcycle for $8,000. You plan to ride the motorcycle for two years, and then sell it for $3,200. During this two-year period, you expect to ride the motorcycle 10,000 miles each year, and you expect the motorcycle to get 50 miles per gallon of gasoline. The annual cost of insurance is $960, registration costs are $80 (good for two years), and the price of gasoline is $2.50 per gallon. During this same two-year period, you will need to service your motorcycle five times, at $240 per service check, and obtain five oil changes. Each oil change costs $35. You will also need to replace your tires once during this two-year period, for a total cost of $40. a. Calculate the total fixed cost, total variable cost, and cost per mile for the two-year period, and then complete the table below. Instructions: Round your answers for total fixed cost and total variable cost to the nearest whole number. Round your answer for cost per mile to two decimal places. Total Fixed Cost Total Variable Cost Cost per Mile $ $ $ b. Suppose you want to lower the cost per mile. You should focus on: O variable costs, because they can be avoided. O fixed costs, because they represent a majority of the total costs. O variable costs, because they represent a majority of the total costs. O fixed costs, because they must be paid.

Economics:
Economics:
10th Edition
ISBN:9781285859460
Author:BOYES, William
Publisher:BOYES, William
Chapter22: Supply: The Costs Of Doing Business
Section: Chapter Questions
Problem 11E
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You just bought a motorcycle for $8,000. You plan to ride the motorcycle for two years, and then sell it for $3,200. During this two-year period, you expect to ride the motorcycle 10,000 miles each year, and you expect the motorcycle to get 50 miles per gallon of gasoline. The annual cost of insurance is $960, registration costs are $80 (good for two years), and the price of gasoline is $2.50 per gallon. During this same two-year period, you will need to service your motorcycle five times, at $240 per service check, and obtain five oil changes. Each oil change costs $35. You will also need to replace your tires once during this two-year period, for a total cost of $400. a. Calculate the total fixed cost, total variable cost, and cost per mile for the two-year period, and then complete the table below. Instructions: Round your answers for total fixed cost and total variable cost to the nearest whole number. Round your answer for cost per mile to two decimal places. Total Fixed Cost Total Variable Cost Cost per Mile $ $ $ b. Suppose you want to lower the cost per mile. You should focus on: O variable costs, because they can be avoided. O fixed costs, because they represent a majority of the total costs. O variable costs, because they represent a majority of the total costs. O fixed costs, because they must be paid.
Transcribed Image Text:You just bought a motorcycle for $8,000. You plan to ride the motorcycle for two years, and then sell it for $3,200. During this two-year period, you expect to ride the motorcycle 10,000 miles each year, and you expect the motorcycle to get 50 miles per gallon of gasoline. The annual cost of insurance is $960, registration costs are $80 (good for two years), and the price of gasoline is $2.50 per gallon. During this same two-year period, you will need to service your motorcycle five times, at $240 per service check, and obtain five oil changes. Each oil change costs $35. You will also need to replace your tires once during this two-year period, for a total cost of $400. a. Calculate the total fixed cost, total variable cost, and cost per mile for the two-year period, and then complete the table below. Instructions: Round your answers for total fixed cost and total variable cost to the nearest whole number. Round your answer for cost per mile to two decimal places. Total Fixed Cost Total Variable Cost Cost per Mile $ $ $ b. Suppose you want to lower the cost per mile. You should focus on: O variable costs, because they can be avoided. O fixed costs, because they represent a majority of the total costs. O variable costs, because they represent a majority of the total costs. O fixed costs, because they must be paid.
There are economies of scale in ranching, especially with regard to fencing land. Suppose that barbed-wire fencing costs $16,000 per mile to set up. Instructions: Enter your answers as a whole number. a. How much would it cost to fence a single property whose area is one square mile if that property also happens to be perfectly square, with sides that are each one mile long? 2$ b. How much would it cost to fence exactly four such properties, which together would contain four square miles of area? 2$ c. Now consider how much it would cost to fence in four square miles of ranch land if, instead, it comes as a single large square that is two miles long on each side. 2$ d. Which is more costly-fencing in the four, one-square-mile properties or the single four-square-mile property? O The single four-square-mile property O Four, one-square-mile properties
Transcribed Image Text:There are economies of scale in ranching, especially with regard to fencing land. Suppose that barbed-wire fencing costs $16,000 per mile to set up. Instructions: Enter your answers as a whole number. a. How much would it cost to fence a single property whose area is one square mile if that property also happens to be perfectly square, with sides that are each one mile long? 2$ b. How much would it cost to fence exactly four such properties, which together would contain four square miles of area? 2$ c. Now consider how much it would cost to fence in four square miles of ranch land if, instead, it comes as a single large square that is two miles long on each side. 2$ d. Which is more costly-fencing in the four, one-square-mile properties or the single four-square-mile property? O The single four-square-mile property O Four, one-square-mile properties
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