EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Chapter 27, Problem bFCT
To determine
Reason for less electricity utility.
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How General Motors improve or operate their economies of scale?
Q2. 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.
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c. If a truck were driven 80,000 kilometers during a year, what total cost would you expect to be incurred?
Imagine you are running a business that processes horticultural product, and is currently producing 40,000 tonnes of product per year. The average cost of producing 40,000 tonnes is $600 per tonne.
A buyer for a large supermarket chain comes along and offers to buy an extra 10,000 tonnes of your product at a price of $300 per tonne. This price is much less than the average cost of production for the current annual output. With the current production system of the business, the marginal cost per tonne of producing an extra tonne is $200/ton.
1. Would you accept or reject this offer, and why?
2. What principles underlie your reasoning in deciding whether to accept or reject this offer?
Chapter 27 Solutions
EBK ECONOMICS TODAY
Ch. 27 - Prob. 27.1LOCh. 27 - Prob. 27.2LOCh. 27 - Prob. 27.3LOCh. 27 - Prob. 27.4LOCh. 27 - Prob. 27.5LOCh. 27 - Prob. 27.6LOCh. 27 - Prob. aFCTCh. 27 - Prob. bFCTCh. 27 - Prob. cFCTCh. 27 - Prob. dFCT
Ch. 27 - Prob. eFCTCh. 27 - Prob. 1CTQCh. 27 - Prob. 2CTQCh. 27 - Prob. 1FCTCh. 27 - Prob. 2FCTCh. 27 - Prob. 1PCh. 27 - Prob. 2PCh. 27 - Prob. 3PCh. 27 - Prob. 4PCh. 27 - Prob. 5PCh. 27 - Prob. 6PCh. 27 - Prob. 7PCh. 27 - Prob. 8PCh. 27 - Prob. 9PCh. 27 - Prob. 10PCh. 27 - Prob. 11PCh. 27 - Prob. 12PCh. 27 - Prob. 13PCh. 27 - Prob. 14PCh. 27 - Prob. 15PCh. 27 - Prob. 16P
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