Grear Tire Company has produced a new tire with an estimated mean lifetime milea
ID: 3006693 • Letter: G
Question
Grear Tire Company has produced a new tire with an estimated mean lifetime mileage of 36,500 miles. Management also believes that the standard deviation is 5000 miles and that tire mileage is normally distributed. To promote the new tire, Grear has offered to refund some money if the tire fails to reach 30,000 miles before the tire needs to be replaced. Specifically, for tires with a lifetime below 30,000 miles, Grear will refund a customer $1 per 100 miles short of 30,000.
(a) For each tire sold, what is the expected cost of the promotion? If required, round your answer to two decimal places. (b) What is the probability that Grear will refund more than $50 for a tire? If required, round your answer to three decimal places. (c) What mileage should Grear set the promotion claim if it wants the expected cost to be $2.00? If required, round your answer to the hundreds place.Explanation / Answer
Ans-
uct occurs where MB equals MC. If MC exceeds MB, fewer resources
should be allocated to this use.
The resources are more
valuable in some alternative use (as reflected in the higher MC)
than in this use (as reflected in the lower MB).
2-10 Label point G inside the production possibilities curve you
have drawn for question 6. What does it indicate? Label point H
outside the curve. What does this point indicate? What must occur
before
the economy
can attain the level
of production indicated
by
point H?
G indicated unemployment, productive inefficiency, or both. H
is at present unattainable. Economic growth—through more inputs,
better inputs,
improved
technology—must
be achieved
to
attain
H.
2-11 Referring again to question 6, suppose improvement occurs
in the technology of producing rockets
but
not in the production
of automobiles.
Draw the new production possibilities
curve. Now assume that a technological advance occurs in producing
automobiles but
not in producing rockets.
Draw the new
production possibilities curve. Now draw a production possibilities
curve
that reflects technological improvement
in the production
of both products.
shows improved rocket
technology. PPC
See the graph for question 2-6. PPC
2
1
shows improved auto technology. PPC
shows
3
70 4.30 77
65 4.60 79
60 4.90 81 _____
a. What will be the market or equilibrium price? What is the
equilibrium quantity? Using the surplus-shortage column, eplain why your answers are correct.
b. Graph the demand for wheat and the supply of wheat. sure to label the axes of your graph correctly. Label equilibrium
price
“P”
and the equilibrium quantity “Q.”
c. Why will $3.40 not be the equilibrium price in this marWhy not $4.90? “Surpluses drive prices up; shortages drthem down.” Do you agree?
d. Now suppose that the government establishes a ceiling
price of, say, $3.70 for wheat. Explain carefully the effthis ceiling price. Demonstrate your answer graphicallymight prompt the government to establish a ceiling pr
Data from top to bottom: 13; 7; 0; 7; 14; and 21.
Price per bushel
$4.90
4.60
D
Question 3-7
S
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.