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Problem 5 (10 points) Consider the plight of Bill, who operates a fleet of hot dog carts. Bill must choose the number of hot dog
Problem 5 (10 points) Consider the plight of Bill, who operates a fleet of hot dog carts. Bill must choose the number of hot dog carts (K) he will operate in the upcoming summer. Suppose that pk = price of a hot dog stand = $2000, r=real interest rate = 4 percent, d=depreciation rate = 6 percent. a) (4 pts.) Find the user cost of a hot dog cart. b) (6 pts. Now suppose that MPKf = expected hot dogs sold per cart = 350 2K, T = effective tax rate on Bill's earnings = 20 percent. Assuming that hot dogs sell for $1 apiece, how many hot dog carts should Bill operate
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