Question

6 brother Scoop to bury the cars, or he could buy a low-quality car smasher that costs $200 a year to In Problem 3, Rex Carr could pay $10 for a shovel that lasts one year and pay $5 a car to his marginal cost of $1 per car. If it is also possible for Rex to buy a high- car smasher that cost $650 per year to own and if with this smasher he could dispose own and that smashes cars at a C quality hydraulic of cars at a cost of $0.75 per car, it would be worthwhile for him to buy this high-quality smasher if he planned to dispose of at least 1,800 cars per year. b. no more than 900 car per year. at least 1,810 cars per year. no more than 1,800 cars per year. a. c. d. at least 900 cars per year. e.

Answer 1

The fixed cost pertaining to low-quality car smasher is $200.

The fixed cost pertaining to high-quality car smasher is $650.

Higher the fixed cost, larger should be the output to spread such high fixed cost and to reduce the average total cost.

If Rex disposes at least 1,810 cars per year then,

Total cost with high quality car smasher = $650 + ($0.75 * 1810) = $650 + $1,357.50 = $2,007.50

Total cost with low quality car smasher = $200 + ($1 * 1810) = $200 + $1,810 = $2,010

Thus,

It would be worthwhile for Rex to buy high-quality smasher if he planned to dispose of at least 1,810 cars per year.

Hence, the correct answer is the option (c).