Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs to purchase,and Model B,which costs $50 000 to purchase.You have a budget of for the purchase of new vehicles.If you were to draw a budget line to illustrate the choice between Model A and Model B vehicles,with A on the vertical axis and B on the horizontal axis,the vertical intercept and the horizontal intercept,respectively,would be
A)10 and 10.
B)6 and 6.
C)0 and 10.
D)0 and 0.
E)10 and 6.

Question

Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs  to purchase,and Model B,which costs $50 000 to purchase.You have a budget of  for the purchase of new vehicles.If you were to draw a budget line to illustrate the choice between Model A and Model B vehicles,with A on the vertical axis and B on the horizontal axis,the vertical intercept and the horizontal intercept,respectively,would be
A)10 and 10. 
B)6 and 6. 
C)0 and 10. 
D)0 and 0. 
E)10 and 6.

Quizplus · Accepted Answer

The budget line can be represented by the equation:
11eac5cb_5b55_bd4b_888f_f58b11d27783_TB7713_00_TB7713_00 = 11eac5cb_5b55_bd4a_888f_2d69e639c8d9_TB7713_00_TB7713_00 * A + 50 000 * B

To find the vertical intercept, we can set B = 0 and solve for A:
11eac5cb_5b55_bd4b_888f_f58b11d27783_TB7713_00_TB7713_00 = 11eac5cb_5b55_bd4a_888f_2d69e639c8d9_TB7713_00_TB7713_00 * A
A = 11eac5cb_5b55_bd4b_888f_f58b11d27783_TB7713_00_TB7713_00 / 11eac5cb_5b55_bd4a_888f_2d69e639c8d9_TB7713_00_TB7713_00
A = 10

To find the horizontal intercept, we can set A = 0 and solve for B:
11eac5cb_5b55_bd4b_888f_f58b11d27783_TB7713_00_TB7713_00 = 50 000 * B
B = 11eac5cb_5b55_bd4b_888f_f58b11d27783_TB7713_00_TB7713_00 / 50 000
B = 0.22

Therefore, the budget line intercepts the vertical axis at A = 10 and the horizontal axis at B = 0.22.

The best choice(s) depend on the preferences of the courier service in terms of cost and performance of the two vehicle models. If Model A is cheaper to operate and maintain, and provides sufficient performance, then it would be the best choice. On the other hand, if Model B has better performance and/or lower operating costs, then it may be the better choice. The optimal choice would be the one that maximizes the value for the courier service, given their priorities and limitations.

Suppose You Own a Courier Service and You Use Two