Question

# Speedy Garage Doors is a two-person firm offering installation and maintenance of electronic security systems. Each...

Speedy Garage Doors is a two-person firm offering installation and maintenance of electronic security systems. Each maintenance service call, which requires both locksmiths, generates a certain amount of revenue but takes both locksmiths away from being able to perform initial installations, where they would generate \$100 each in profit for the company. \$30 of vehicle costs (including fuel and depreciation) are incurred every tme a 1-hour service call is made. Each locksmith is paid \$55.00 per year and has enough time to participate in 550 service calls per year or perform 550 installations.

If a maintenance service calls generates \$250 in revenue, how much economic profit is make on 100 maintenance service calls?

Opportunity costs i.e. implicit costs for 100 maintenance service calls = profit foregone for 100 installations = \$100 *100 = \$10,000.

The vehicle costs = \$30 * 100 = \$3,000.

Labor costs per maintenance calls = \$55/550 = \$0.10. So, for 100 maintenance calls, total labor costs = 100 * \$0.10 = \$10

So, total explicit costs = vehicle costs + labor costs = \$3,000 + \$10 = \$3,010.

Total revenue = \$250 * 100 = \$25,000.

Economic profit = total revenue - (implicit costs + explicit costs) = \$25,000 - (\$10,000 + \$3,010) = \$25,000 - \$13,010 = \$11,990.

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Need Online Homework Help?

Most questions answered within 1 hours.

##### Active Questions
• Distinguish between the typical roles of geologist and engineers in dealing with groundwater problems. How do...
• 5) A rock is thrown directly southeast (45 degrees to S and E), at an initial...
• If 133.2 kJ of heat are added to 5.80 × 102 g of water at 22.0°C,...
• true/false An unweighted path length measures the number of edges in a graph. Breadth first search...
• Give an example of the effect of interest rate changes on a fixed coupon bond, what...
• Thirty-two small communities in Connecticut (population near 10,000 each) gave an average of x = 138.5...