4. Incremental Cost Analysis Referring to the above problem, suppose that the city wants a two-year deal.

In the second year of the deal, the recycling materials from the city will be 5,000 tons. The county analysis shows that a new vehicle is needed for the increase. The estimated purchasing price of the vehicle is $30,000, and the annual maintenance cost is the same, $10,000.

Considering this change, and also treating the fuel and the overhead as variable costs and others as fixed costs, calculate the incremental cost and marginal cost for the county. If the city still wants to pay the same rate for the service, $6.00 a ton, should the county accept the offer? (Note: Use annual maintenance cost for the vehicle in the calculation.)