Two new rides are being compared by a local amusement park in terms of their annual operating costs. The two rides would generate the same level of revenue (thus the focus on costs). The Tummy Tugger has fixed costs of $10,000 per year and variable costs of $2.50 per visitor. The Head Buzzer has fixed costs of $4000 per year and variable costs of $4 per visitor. Provide answers to the following questions so the amusement park can make the needed comparison. (a) Mathematically determine the breakeven number of visitors per year for the two rides to have equal annual costs.

The indifference point is 4,000 visitors.

Explanation:

Giving the following information:

The Tummy Tugger has fixed costs of $10,000 per year and variable costs of $2.50 per visitor. The Head Buzzer has fixed costs of $4000 per year and variable costs of $4 per visitor.

First, we need to determine the cost equation for each option:

Tummy= 10,000 + 2.5X

Head= 4,000 + 4X

X= number of visitors

Now, to determine the indifference point, we need to equal the formulas and isolate X.

10,000 + 2.5X= 4,000 + 4X

6,000= 1.5X

4,000= X

To prove it:

Tummy= 10,000 + 2.5*4,000= $20,000

Head= 4,000 + 4*4,000= $20,000

The indifference point is 4,000 visitors.

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1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know