Question

Using landed cost, determine the extent of the market that can be covered by each firm. Two firms (A & B) are located 250 miles apart. A has a production cost of $12 per unit and a transportation cost of $.15 per unit per mile. B has a production cost of $19 per unit and a transportation cost of $.16 per unit per mile. Determine the extent of the market of A & B. a. A = 151.6 miles; B = 98.4 miles b. A = 162.3 miles; B = 87.7 miles c. A = 87.7 miles; B = 162.3 miles d. A = 250 miles; B = 0 miles e. A = 98.4 miles; B = 151.6 miles f. None of the above

Answer 1

Answer is a. A = 151.6 miles; B = 98.4 miles