For Each Carload of Ore Removed from the Matchless Mine

question 35

Multiple Choice

For each carload of ore removed from the Matchless Mine, 1 pound of lead and 1 ounce of silver is smelted.The cost of mining and processing 1 carload of ore is C(Q) = 700 + 2Q + 0.09Q².The demand for silver (per ounce) is P_s = 40 - 0.30Q_s and the demand for lead (per pound) is P_l = 5 - 0.02Q_l.What should the owners of the Matchless Mine do to maximize profits (in the long run) ?

• A)Mine and process 52.44 carloads of ore, sell 52.44 ounces of silver, and sell 52.44 pounds of lead.
• B)Mine and process 66.67 carloads of ore, sell 66.67 ounces of silver, and sell 13.64 pounds of lead.
• C)Mine and process 125 carloads of ore, sell 66.67 ounces of silver, and sell 125 pounds of lead.
• D)Mine and process 125 carloads of ore, sell 48.72 ounces of silver, and sell 125 pounds of lead.
• E)Shut down the mine.

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Definitions:

NPV

Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or project, by calculating the difference between the present value of cash inflows and outflows over a period.

Incremental Value

The additional or increased value generated by a new investment, project, or action compared to the value without undertaking the activity.

Merger Premium

The extra amount an acquiring company pays over the market price of the target company during a merger.

Equity-Financed

A method of raising capital by selling ownership stakes in the company, typically through issuing shares.