Managerial Economics Assignment: Cost, Opportunity Cost Analysis

This document presents a solved managerial economics assignment, addressing key concepts such as marginal cost and opportunity cost. The assignment includes three questions: the first calculates the marginal cost of installing a terminal at a different location, the second determines the opportunity cost associated with a touch screen, and the third analyzes the opportunity cost related to missing work. The solution employs equations and calculations to arrive at the answers, providing a clear explanation of each step. A bibliography of relevant sources is also included. This assignment provides valuable insights into cost analysis, making it a useful resource for students studying managerial economics. Desklib offers similar resources for academic support.

Running head: MANAGERIAL ECONOMICS
Managerial Economics
Name of the Student:
Name of the University:
Author’s Note:

1MANAGERIAL ECONOMICS
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................2
Question 3........................................................................................................................................3
Bibliography....................................................................................................................................4

2MANAGERIAL ECONOMICS
Question 1
The marginal cost that would be applicable for the installation of the terminal at other location
can be well calculated as follows:
Equation 1: Fixed Cost + 4×Marginal Cost = $60,000
Equation 2: Fixed Cost + 6×Marginal Cost = $80,000.
Now if we well remove the first set of equation from the given set of above equation from both
the sides then the output we would be getting will be: 2×MC = $20,000
Now MC: $20,000/2
MC = $10,000
Question 2
In order to well calculate opportunity cost for the touch screen, we need to well calculate the
total compensation benefit provided, along with the cost per order that would be incurred. The
total compensation can be well calculated by taking the Cost of Wages which is around
$7.50/hour and around $4.50/hour in insurance, taxes and benefits provided.
Total Compensation: $7.50+$4.50
Total Compensation: $12.00
No of Orders Per Hour: 20
Cost Per Order: 20/$12: $0.60.

3MANAGERIAL ECONOMICS
However the total time taken for replacing a touch screen is as follows:
Total Orders Processed by Employees/Orders Processed by Terminals
:20/15: 4/3
Opportunity Cost: (4/3)*$0.60
Opportunity Cost: 1.33*$0.60
Opportunity Cost: 0.80
Question 3
It is important to note that since the Airlines would be making a return flight later on
Monday and it would not be costing any additional set of money for reaching home, if we are
well willing to reach work on Monday. However, if you still want to be there in the work, the
airline ticket would be well considered as a suck cost. However, in this point of time period the
opportunity cost of missing the work would only be $60.

4MANAGERIAL ECONOMICS
Bibliography
Alfonso, Y.N., Johnson, S.L., Cheng, T., Jones, V., Ryan, L., Fein, J. and Bishai, D., 2019. A
marginal cost analysis of a Big Brothers Big Sisters of America youth mentoring program: New
evidence using statistical analysis. Children and Youth Services Review, 101, pp.23-32.
Becker, N. and Farja, Y., 2018. Estimating the marginal cost of nature conservation: evidence
from Israel. International Journal of Sustainable Development & World Ecology, 25(4), pp.340-
350.
Chodorow-Reich, G. and Karabarbounis, L., 2016. The cyclicality of the opportunity cost of
employment. Journal of Political Economy, 124(6), pp.1563-1618.
Siverskog, J. and Henriksson, M., 2019. Estimating the marginal cost of a life year in Sweden’s
public healthcare sector. The European Journal of Health Economics, 20(5), pp.751-762.
Stretcher, R., Funck, M. and Johnson, S., 2017. Capital investment and non-constant marginal
cost of capital. Journal of Economics and Finance, 41(1), pp.27-50.
Xu, T., Engel, B.A., Shi, X., Leng, L., Jia, H., Shaw, L.Y. and Liu, Y., 2018. Marginal-cost-
based greedy strategy (MCGS): Fast and reliable optimization of low impact development (LID)
layout. Science of The Total Environment, 640, pp.570-580.