A local car dealership's average customer comes in once every 10 years, and spends $30,000 on each purchase. An average customer
1 answer:
The lifetime value of a local car dealership for an average customer is $120,000.
<h3>What is meant by a lifetime value?</h3>A lifetime value is an average amount that is being earned by the customer over the time period till its being a customer of a particular service.
Given values:
Amount spent by customer: $30,000
The average number of years: 40 years
Computation of lifetime value (LTV):
Therefore, when a customer spends $30,000 on a car dealership for 40 years of average time then its lifetime value would be $120,000.
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Answer:
Since 0.33 + 0.75 = 1.08 is greater than one, this production function therefore exhibits increasing returns to scale.
Explanation:
From the question, we have the following restated equation:
Where q is the output, and L and K are inputs
To determine the types of returns to scale, we increase each of L and K inputs by constant amount c as follows:
We can now solve as follows;
Since 0.33 + 0.75 = 1.08 is greater than one, this production function therefore exhibits increasing returns to scale.