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Question 4: Mark brought home eight turkeys from his last hunting trip in northern Minnesota. His friend Tom dislikes any type of hunting, and to
Question 4: Mark brought home eight turkeys from his last hunting trip in northern Minnesota. His friend Tom dislikes any type of hunting, and to discourage Mark from further hunting, Tom has presented him with the following cost estimates: Camper and equipment: Cost, $16,000; usable for eight seasons; 10 hunting trips $200 per season Travel expense (pickup truck): 100 kilometres at $0.35 per kilometre (gas, oil, and tires$0.25 per kilometre; depreciation and insurance $0.10 per kilometre) 35 Shotgun shells (two boxes) 20 Boat: Cost, $4,000, usable for eight seasons; 10 hunting trips 50 per season Hunting licence: Cost, $30 for the season; 10 hunting trips per season Money lost playing poker: Loss, $40 (Jason plays poker every weekend) 3 40 Coffee beans: 20 Cost, $20 Total cost of the trip Cost per duck ($368 + 8 ducks) $368 S 46 Required: 1. Assuming that the duck hunting trip Mark has just completed is typical, what costs are relevant to a decision as to whether Mark should go duck hunting again this season? 2. Suppose that Mark gets lucky on his next hunting trip and shoots 10 turkey in the amount of time it took him to shoot 8 turkey on his last trip. How much would it have cost him to shoot the last two turkey? Explain. 3. Which costs are relevant in a decision of whether Mark should give up hunting? Explain. Page + 3 / 4
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