How does the break-even price depend on price of gasoline

Assignment Help Microeconomics

Reference no: EM133285452

Assignment:

A ride-hail service must choose cars. In the 2021 model year, gasoline-powered Hyundai Elantra yielded 31 miles per gallon, while the hybrid gasoline-electric Toyota Prius yielded 54 miles per gallon. In the United States, the cheapest Elantra cost US$19,650 as compared with the cheapest Prius at US$24,525. Suppose a business has bought both cars. (Hint: The following questions do not require any calculation.)

1. Compare the fixed and variable costs of operating the two cars.

2. Compare the short-run break even prices of operating the two cars.

3. How does the break-even price depend on the price of gasoline?

4. In the short run, if demand falls, which car should be withdrawn from operation?

5. In the long run, demand is uncertain. Justify the following plan: buy Priuses to meet the lowest expected demand, and then buy Elantras for the additional demand.

Reference no: EM133285452

Questions Cloud

What is the rationale of implementing a price promotion : What is the rationale of implementing a price promotion during the peak season and not a counter cyclical promotion in off peak periods?

What are the sources of english common law : What are the sources of English Common Law? Further, how does Common Law apply precedent in deciding cases in court?

Analyze macroeconomic performance : Select any ONE Pacific Island economy and analyze its macroeconomic performance over the past 10 years.

Why a monopoly firm is inefficient in resource allocation : Using profit maximization diagram, explain why a monopoly firm is inefficient in resource allocation compared to perfectly competitive firm.

How does the break-even price depend on price of gasoline : Compare the short-run break even prices of operating the two cars. How does the break-even price depend on the price of gasoline?

Developing the market supply curve : As demonstrated in the lecture notes (Developing the Market Supply Curve - Table A: Profit Analysis - ABC Fishing Inc.

Explain the difference in way economist : Using economic theory how would you explain the difference in way Economist A goes about maximizing her utility to Economist B?

What is the market equilibrium outcome : Suppose the (inverse) market supply curve is P = 1/15 QS , what is the market equilibrium outcome?

What type of menu dependence is mont trying to exploit : What type of Menu Dependence is Mont trying to exploit? (Asymmetric Dominance or Compromise Effect).

User Account

All Pages