Question
Consider the followingcostsof owning and operating a car. An $18,000 Fiat 500 Pop financed over 60 months at 4 percent interest means a monthly payment
Consider the followingcostsof owning and operating a car. An $18,000 Fiat 500 Pop financed over 60 months at 4 percent interest means a monthly payment of $331.50. Insurancecosts$120 a month regardless of how much you drive. The car gets 35 miles per gallon and uses regular-grade gasoline thatcosts$2.60 per gallon. Finally, suppose that wear and tear on the carcostsabout 20 cents a mile. Whichcostsare fixed, and which are variable? What is the marginalcostof a mile driven? In deciding whether to drive from Atlanta to Las Vegas (about 2,000 miles round-trip), whichcostswould you consider? Why?
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