Question

Complete the following problems from Chapters 4 and 5 in Managerial Economics: A Problem Solving Approach. For each question, write 250-500 word explanation clearly showing how you solved the problem.

1. Chapter 4: Problems 4-2 and 4-6
2. Chapter 5: Problems 5-4 and 5-5

APA style is not required, but solid academic writing is expected.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

4-2 Game Day Shuttle Service

You run a game day shuttle service for parking services for the local ball club. Your costs for different customer loads are

1:$30, 2:$32, 3:$35, 4:$38, 5:$42, 6:$48, 7:$57, and 8:$68.What are your marginal costs for each customer load level? If you are compensated $10 per ride, what customer load would you want?

4-6 Copier Company a copy company

Wants to expand production. It currently has 20 workers who share eight copiers. Two months ago, the firm added two copiers, and output increased by 100,000 pages per day. One month ago, they added five workers, and productivity also increased by 50,000 pages per day. Copiers cost about twice as much as workers. Would you recommend they hire another employee or buy another copier?

5-4 Solar Panel Installation

A university spent $1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kW, have a life expectancy of 20 years and suppose the discount rate is 10%. a. If electricity can be purchased for costs of $0.10 per kWh, how many hours per year will the solar panels have to operate to make this project breakeven?

b. If efficient systems operate for 2,400 hours per year, would the project breakeven?

c. The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?

5-5

Last year, a toy manufacturer introduced a new toy truck that was a huge success. The company invested $2.5 million for a plastic injection molding machine (which can be sold for $2.0 million) and $100,000 in plastic injection molds specifically for the toy (not valuable to anyone else).Labor and the cost of materials necessary to make each truck is about $3.This year, a competitor has developed a similar toy that has significantly reduced demand for the toy truck .Now, the original manufacturer is deciding whether they should continue production of the toy truck. If the estimated demand is 100, 000 trucks, what is the break-even price for the toy truck? Should you shut down?

Answer 1

Answer for 4.2

Answer for 4.6

Answer for 5.4 (a) (b) (c)

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