Whether US Airways build the training facility at the location or not.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 8, Problem 1E

To determine

Whether US Airways build the training facility at the location or not.

Expert Solution & Answer

Explanation of Solution

The cost of next best alternative available to US Airways that is, selling the land to developer is $2.5 million.

Further, the airlines do not meet the acceptance criteria of cost not more than $850,000.

The opportunity cost of the foregone alternative is greater than the cost of building the training center at current location. Thus, the optimal decision would be not to build the center at this location and sell the land to the developer.

The US Airways, hence, can build the training center at some other location.

Economics Concept Introduction

Introduction:

Opportunity cost is the next best alternative foregone.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

A local restaurateur who had been running a profitable business for many years, recently purchased a three-way liquor license. This on-premise license gives the owner the legal right to sell beer, wine, and spirits in her restaurant. The cost of obtaining the three-way license was about $90,000, since only 300 such licenses are issued by the state. While the license is transferable, only $75,000 is refundable if the owner chooses not to use the license. After selling alcoholic beverages for about one year, the restaurateur came to the realization that she was losing dining customers and that her profitable restaurant was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements in various newspapers and restaurant magazines across the state offering to sell the license for $80,000. After a long wait, she finally received one offer to purchase her license for $77,000. a) Would you recommend that she accept the $77,000 offer? b) The restaurateur…

an American multinational that sells consumer electronic products, has manufacturing facilities in three countries: Brazil, Thailand, and Canada. The average hourly wage rate, output per worker, and annual overhead cost for each location are as follows: Given the above figures, is Storm currently allocating its production resources optimally? If not, what should it do? Justify your answer. Now, suppose that Storm is planning to consolidate all its manufacturing into one facility. Where should it locate? Justify your answer.

Your client, InsureCorp, is an insurance company considering launching an ‘income insurance’ product in the island nation of Autarka. Income insurance is a product that fully insures a household against changes in income caused by a major injury or illness. At present, no businesses are selling income insurance products in Autarka. Initial market research suggests that there are 10,000 households in Autarka interested in purchasing income insurance. Your client expects that the fixed cost of launching the income insurance product will be $20,000,000 per year, and that each policy issued to a customer will cost the company an additional $1,500 in sales commissions. What is the maximum price the company can charge a household for an income insurance policy? What is the expected profit (or loss) for the company if it becomes a monopoly provider of income insurance? Is there a risk that rival insurance companies will also enter the market, selling identical income insurance products? If…

Answer 2

Question

Chapter 8, Problem 1E

To determine

Whether US Airways build the training facility at the location or not.

Expert Solution & Answer

Explanation of Solution

The cost of next best alternative available to US Airways that is, selling the land to developer is $2.5 million.

Further, the airlines do not meet the acceptance criteria of cost not more than $850,000.

The opportunity cost of the foregone alternative is greater than the cost of building the training center at current location. Thus, the optimal decision would be not to build the center at this location and sell the land to the developer.

The US Airways, hence, can build the training center at some other location.

Economics Concept Introduction

Introduction:

Opportunity cost is the next best alternative foregone.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 8, Problem 1E

To determine

Whether US Airways build the training facility at the location or not.

Expert Solution & Answer

Explanation of Solution

The cost of next best alternative available to US Airways that is, selling the land to developer is $2.5 million.

Further, the airlines do not meet the acceptance criteria of cost not more than $850,000.

The opportunity cost of the foregone alternative is greater than the cost of building the training center at current location. Thus, the optimal decision would be not to build the center at this location and sell the land to the developer.

The US Airways, hence, can build the training center at some other location.

Economics Concept Introduction

Introduction:

Opportunity cost is the next best alternative foregone.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 8, Problem 1E

To determine

Whether US Airways build the training facility at the location or not.

Expert Solution & Answer

Explanation of Solution

The cost of next best alternative available to US Airways that is, selling the land to developer is $2.5 million.

Further, the airlines do not meet the acceptance criteria of cost not more than $850,000.

The opportunity cost of the foregone alternative is greater than the cost of building the training center at current location. Thus, the optimal decision would be not to build the center at this location and sell the land to the developer.

The US Airways, hence, can build the training center at some other location.

Economics Concept Introduction

Introduction:

Opportunity cost is the next best alternative foregone.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 8, Problem 1E

To determine

Whether US Airways build the training facility at the location or not.

Expert Solution & Answer

Explanation of Solution

The cost of next best alternative available to US Airways that is, selling the land to developer is $2.5 million.

Further, the airlines do not meet the acceptance criteria of cost not more than $850,000.

The opportunity cost of the foregone alternative is greater than the cost of building the training center at current location. Thus, the optimal decision would be not to build the center at this location and sell the land to the developer.

The US Airways, hence, can build the training center at some other location.

Economics Concept Introduction

Introduction:

Opportunity cost is the next best alternative foregone.

Answer 6

Chapter 8, Problem 1E

To determine

Whether US Airways build the training facility at the location or not.

Expert Solution & Answer

Explanation of Solution

The cost of next best alternative available to US Airways that is, selling the land to developer is $2.5 million.

Further, the airlines do not meet the acceptance criteria of cost not more than $850,000.

The opportunity cost of the foregone alternative is greater than the cost of building the training center at current location. Thus, the optimal decision would be not to build the center at this location and sell the land to the developer.

The US Airways, hence, can build the training center at some other location.

Economics Concept Introduction

Introduction:

Opportunity cost is the next best alternative foregone.

Answer 7

Chapter 8, Problem 1E

To determine

Whether US Airways build the training facility at the location or not.

Answer 8

Expert Solution & Answer

Explanation of Solution

The cost of next best alternative available to US Airways that is, selling the land to developer is $2.5 million.

Further, the airlines do not meet the acceptance criteria of cost not more than $850,000.

The opportunity cost of the foregone alternative is greater than the cost of building the training center at current location. Thus, the optimal decision would be not to build the center at this location and sell the land to the developer.

The US Airways, hence, can build the training center at some other location.