It is convenient to let a spreadsheet or graphing calculator do the math for this. Functions can be defined for cost and profit, and evaluated at each of the volumes of interest.
a1) For 200 cars, the Outside location yields the greatest profit
a2) For 300 cars, the City location yields the greatest profit
b) The sites yield the same profit for a volume of 278 cars.
The solution is given below:
<h3>What is price index?</h3>An index number expressing the level of a group of commodity prices relative to the level of the prices of the same commodities during an arbitrarily chosen base period and used to indicate changes in the level of prices from one period to another.
Given:
Comm. p0 q0 p1 q1 p0q0 p1q0 p1q1 p0q1
A 25 750 30 960 18750 750 28800 24000
B 30 450 25 550 13500 750 13750 16500
C 5 250 6 360 1250 30 2160 1800
D 6 90 7 210 540 42 1470 1260
E 10 140 10 190 1400 100 1900 1900
F 4 48 5 65 192 240 365 260
Now,
p0q0 = 35632
p1q0 = 1912
p1q1 = 48445
p0q1= 45720
1) P01(L) = p1q0/
p0q0 * 100
= 5.36
2) P01(L) = p1q1/
p0q1 * 100
= 105.96
Dorbish- Bowley
= 5.36+ 105.96/2
=55.66
Marshall- Edgeworth
= 1912+ 48445/35632 + 45720
= 50357/ 81352
= 0.619 *100= 61.9
Fisher's price index
=( 5.36 * 105.96 )^ 0.5
=23.831
Learn more about price index here:
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