1. Let y be the distance that potential passenger would travel.
a be the price per kilometer.
h be the average hours of waiting by the taxi driver at the airport.
b be the opportunity cost of waiting at the airport.
The minimum required distance for the airport taxi driver can be calculated by
2. Assume that the company is in Thailand.
The first stage is designing which take place in Thailand, assume that the gift box consist of two parts, the box and the ribbon.
The design of the box is sent to a company in China. The box are produced according to the design and be sent to the company in Thailand.
The ribbons are produced in Indonesia and be ...view middle of the document...
If the total economic costs are acceptable, start applying the required procedure such as
1) Prepare and Apply for Project Proposal
2) Prepare and Apply for Feasibility Study
3) Obtain a Certificate of Approval
4) Apply for Business License
The explicit cost consists of the money you will invest to start a company for 1 million plus the 10,000 yuan fee for starting the business. Which make the total amount of explicit cost to be 1,010,000 yuan.
The implicit cost is the interest you would receive from the bank if you had not decided to start a company. Assume that you would have deposited 1 million Yuan in the bank for 5 years so the interest can be calculated by 1,000,000-[(1+0.04)5×1,000,000]=220,000.
The economic cost = explicit cost + implicit cost = 1,230,000 Yuan.
* Explicit cost is the amount of money sacrificed by firm owners to get market-supplied resources
Implicit cost is the return to an owner-supplied resource if the owners had taken that resource to the market instead of using it themselves.
* Market-supplied resources are resources owned by others and hired, or leased by the firm.
Owner-supplied resources are resources provided or owned by the firm.
* Total economic cost is the total opportunity costs of explicit and implicit cost.
* By installing the large kitchen on an airplane, the airline would have paid for larger and more kitchen equipment as an explicit cost. The airline also loses some space on the plane which could be made for another purpose such as passenger zone, these loses of space considered as implicit cost. Both of these explicit and implicit cost are the total economic costs of installing large kitchen on the plane.