Indifference Points Taxi Application You are a freelance driver when you find ti
ID: 3169823 • Letter: I
Question
Indifference Points Taxi Application You are a freelance driver when you find time in between classes and extra-curricular activities. With everything under the table (ignore tax), you can make $0.80 per mile when you drive. Currently, you drive a terrible car that costs of $0.60 per mile (Andrew). You begin thinking that if you upgrade your car to a vehicle that is more efficient, your costs per mile might decrease, resulting in a higher profit! You borrow cars from a few of your friends to test your theory and it turns out you are correctil With your eye on making a higher profit, you search for newer cars that are both more appealing and more efficient. You find four additional cars that suit your preferences but have trouble figuring out which car you like the most. You decide to make the intelligent and wise decision by making an indifference table, based off of the car's costs and how many miles you will have to drive to drive to make each vehicle the most profitable Here are some names and stats for the vehicles that you are considering Car PriceVariable Fixed Costs Description Name Mile ost / Mile Current vehicle, it's a wreck and robably illegal to drive it on the road Almost as old as your grandparents Slightly stylish, fairly efficient Andrew $0.80 $0 80 0.80 S0 2.000 60 $0,50 40 Very efficient. www.KBB.com rates it as "GOOD Pretty much brand neww David$0.80 $9,000 Fill out the indifference table on the next page. Create a summary rule for the vehicles that is the most profitable between mileage ranges. Hint Ignore the cost and benefits associated with the potential sale of your old car Hint You may not necessarily need to use all 11 indifference points in the table, or all 10 rows in the summary table Indifference Points Taxi Application- Output Indifference Points Test Proft Profit Profit Profit ints A" Proft"E" 10 ecision Rule Summa MilesXExplanation / Answer
for calculating the profit for each car per mile, we subtract cost/mile from price/mile of that car.
test points= 1
Optimal distance required would be (fixed cost)/(profit/mile)