Question

2. Automobile Leasing: A car leasing agency purchases new cars each year for use in the agency. The cars cost $15000 new. They are used for 3 years after which they are sold for $4500. The owner of the agency estimates that variable cost of operating the cars, exclusive of the gasoline are $0.18 per mile. Cars are leased for a flat fee of $0.33 per mile ( gasoline not included)
a. Formulate the total revenue function associated with renting one of the cars a total of x miles over a 3 year period
b. Formulate a total cost function associated with renting a car for total of x miles over 3 year period
c. Formulate a profit function
d. What is the profit if 10000 units are produced and sold during the year?
e. What level of output is required in order to earn zero profit?

Answer 1

Answer:

Data Given : Price for new Car= 15000$ Selling price of used car = 4500$ Cost for excluding gasoline= .18 $ per mile. Rent provided by agency excluding gasoline= .33$ per mile Suppose a Car travels x miles for a period of three years the total costing of this will be as follows : Travelling cost for x miles excluding gaslonie :..

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