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Eric and Kyle are fishermen with different equipment and, as a result, different costs for catching fish
Eric and Kyle are fishermen with different equipment and, as a result, different costs for catching fish. Eric's costs for catching fish are $875 per ton for the first five tons and then $2,188 per ton for any additional tons. Kyle can harvest fish at a cost of $2,625 per ton for the first 15 tons and then $1,225 for any additional tons. Instructions:
a. If society wants 30 tons of fish and for some reason will only allow one of the two guys to do all the fishing, which one should society choose if it wants to minimize the cost of catching those 30 tons of fish? (Eric or Kyle). How much will the total cost of catching the fish be? What will the average cost per ton be for the 30 tons?
Expert Solution
Given that:
Eric cost for 30 tons = 875 * 5 + 2188 * 25
=> 4,375 + 54,700
=> 59,075
Now,
Average Cost = 59075 / 30
=> $1959.17 / ton
Kyle's cost for 30tons = 2625 * 15 +1225 * 15
=> $57750
Therefore,
Average cost = 57750 / 30
=> $1925 / ton
So, as the average cost for Kyle is less. Thus, Kyle should focus on fish catching with total cost of $57750 and average cost of $ 1925.
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