Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs $30 000 to purchase,and Model B,which costs $50 000 to purchase.You have a budget of $300 000 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

Quizplus · Accepted Answer

The budget line can be drawn using the formula:

30,000A + 50,000B = 300,000

Simplifying this equation:

3A + 5B = 30

To plot the intercepts, we can set one of the variables to zero and solve for the other:

When A = 0:

3(0) + 5B = 30

B = 6

So the horizontal intercept is 6.

When B = 0:

3A + 5(0) = 30

A = 10

So the vertical intercept is 10.

Therefore, the budget line would pass through the points (0,6) and (10,0).

To find the best choice, we need to consider the tradeoff between cost and effectiveness. Assuming that Model A and Model B have different capabilities (such as speed, fuel efficiency, cargo capacity, etc.), we would need additional information to determine which one is the best choice for the courier service's needs. If both models have similar capabilities, we could simply choose the point on the budget line that offers the best value for the money. This would depend on the specific prices of Model A and Model B, as well as the courier service's budget constraints and priorities.

Suppose You Own a Courier Service and You Use Two