70.2K

Verified Solution

Link Copied!

Volume and pricing

Dim Witt is the county commissioner of Clueless County. He decided to institute tolls for local ferry boat passengers. After the tolls had been in effect for four months, Astra Astute, county accountant, noticed that

collecting $$1,450$ in tolls incurred a daily cost of $$2,000.$ The toll is $$0\mathrm{.}50$ per passenger.

a$.$ How many people are using the ferry boats each day?

b$.(1)$ If the $$2,000$ cost is entirely fixed, how much must each passenger be charged for the toll process to break even?

Note: Round your answer to two decimal places $($for example, round $$4\mathrm{.}655$ to $$4\mathrm{.}66).$

$(2)$ How much must each passenger be charged for the toll process to make a profit of $$250$ per day?

Note: Round vour answer to two decimal places $($for example, round $$4\mathrm{.}655$ to $$4\mathrm{.}66).$

c$.$ Assume that only $80$ percent of the $$2,000$ is fixed and the remainder varies by passenger. If the toll is raised to $$0\mathrm{.}60$ per person, passenger volume is expected to fall by $10$ percent. If the toll is raised and

volume falls, will the county be better or worse off than it is currently and by what amount?

Note: Round your answer to two decimal places $($for example, round $$4\mathrm{.}655$ to $$4\mathrm{.}66).$

d$.$ Assume that only $80$ percent of the $$2,000$ is fixed and the remainder varies by passenger. If passenger volume will decline by $5$ percent for every $$0\mathrm{.}20$ increase from the current $$0\mathrm{.}50$ rate, at what level of use

and toll amount would the county first make a profit?

Note: Round your answer to two decimal places $($for example, round $$4\mathrm{.}655$ to $$4\mathrm{.}66).$

The company would make a profit of $

at a fare level of $

Answer & Explanation Solved by verified expert

See Answer