Always Round Tire Hires Plain Truth Advertising to Write Copy

question 24

Essay

Always Round Tire hires Plain Truth Advertising to write copy for its newspaper advertisements. Always Round has a demand for advertising of MB = 400 -2S where S is the number of hours that Plain Truth delivers. If Plain Truth has a fixed supply cost: MC = $150 per hour, what are the number of hours that Always Round purchases from Plain Truth? Now, if the copy writers are slackers and only deliver 100 hours of work each week, and if the each company must spend $1,250 in monitoring and bonding costs, what is the surplus and residual loss in this environment?

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Definitions:

Shearing Forces

Stresses that cause layers of material to slide past one another, often leading to structural failure or injury.

Compromised Blood Flow

A condition where the normal circulation of blood is hindered, leading to inadequate oxygen and nutrient delivery to tissues.

Mechanical Ventilator

A machine that supports or substitutes for a person’s breathing by moving air into and out of the lungs.

Sedated

A state in which a patient is made calm or less anxious through the administration of sedative drugs.