Rex Carr could pay $10 for a shovel that lasts one year and pay $5 a car to his brother Scoop to bury the cars, or he could buy a low-quality car smasher that costs $200 a year to own and that smashes cars at a marginal cost of $1 per car.If it were also possible for Rex to buy a high-quality hydraulic car smasher that cost $650 per year to own and if with this smasher he could dispose of cars at a cost of $.67 per car, it would be worthwhile for him to buy this high-quality smasher if he needed to dispose of

A) at least 1,350 cars per year.
B) no more than 675 cars per year.
C) at least 1,360 cars per year.
D) no more than 1,350 cars per year.
E) at least 675 cars per year.

Question

Lisaaj Joness · Accepted Answer

Final Answer : A, Explanation :  To determine if it's worthwhile for Rex to buy the high-quality smasher, we compare the total costs of using the shovel and low-quality smasher to the total cost of the high-quality smasher. The break-even point is where the costs are equal. For the shovel and Scoop option, the cost is $10 + $5 per car. For the low-quality smasher, the cost is $200 + $1 per car. For the high-quality smasher, the cost is $650 + $0.67 per car. The high-quality smasher becomes cost-effective when its total cost is less than the other options. Calculating the break-even point for the high-quality smasher against the other options and solving for the number of cars gives us at least 1,350 cars per year.

Definitions

Learning Objectives

Learning Objectives

Related questions