# Answer in Microeconomics for Roy #159368

Question 01                                         05 Marks

The investors of Smith Autos have put up \$500,000 to construct a building and purchase all equipment required to wash cars. The investors expect to earn a minimum return of 10% on their investment.  If the money to set up the business had been borrowed from a bank instead, the car wash owners would have paid a 10% interest rate. The car wash is open 50 weeks per year and washes 800 cars per week. Whether operative or not, the company must pay \$1,000 per week return to investors and \$1,000 per week as insurance. The variable costs for the 800 weekly washes includes \$1,000 labour cost and \$600 materials cost. There are many car washes of equal quality and service in the area and they charge \$5 per car wash.

1. Based on your knowledge of the different forms of market structure, do you think Smith Autos should stay in business? Show calculations.              (2 Marks)
2. Graphically represent the company’s performance, showing profit or loss. (1 Mark)
3. Another car wash company operates inside a gated community in the vicinity and offers its services at \$6 per wash under a licensed agreement. Highlight how is it possible for this company to charge a higher price than the market and still stay in business.                                         (1 Mark)

After a few mouths, due to the forces of demand and supply, the market price is pushed down to \$1.5 per car wash. What course of action will you suggest to Smith Autos?

Step 1

Expenses (every week)

– Return paid : \$1000

– Insurance paid: \$1000

– Variable expenses brought about : \$1600 (work + materials)

Absolute = \$3600

All out Costs in a year = 3600 x 50 = \$1,80,000

Income (every week)

No. of vehicle washes every week = 800

Market cost per wash = \$5

Complete = \$ 4000

Complete Revenue every year = 4000 x 50 = \$2,00,000

Benefit = \$20,000

The organization is as yet procuring benefits of \$20,000 every year subsequent to paying all costs brought about in the wake of paying interests and protection. From the highlights referenced, Smith Autos goes under market structure-Perfect Competition.

In entirely serious market, firms can just experience benefits or misfortunes in the short-run. Over the long haul, benefits and misfortunes are killed in light of the fact that a limitless number of firms are delivering endlessly distinct, homogeneous items.

Smith Autos should continue running since they are procuring benefits.

b)

Step 2

c)

In its advanced structure, a gated local area (or walled local area) is a type of private local area or lodging home containing carefully controlled doors for walkers, bikes, and cars, and frequently portrayed by a shut edge of dividers and wall. A gated local area is an attractive security convenience to most imminent occupants and to most property directors since they can charge a premium for lease. The fundamental reason for a door, on a low-wrongdoing property, isn’t to stop or forestall wrongdoing yet to give the view of security and elatedness.

Thusly, individuals like to remain inside the local area and firms or shops inside these networks get authorized and generally are the solitary firms giving specific merchandise or administrations. They begin to feel and act like imposing business model firms and in this manner can charge marginally higher than shops outside gated networks.

d) If the market cost of a vehicle wash drops by \$1.5 for example becomes \$ 3.5. The absolute income of the Smith Autos will be

Absolute Revenue every year = 50 x 800 x 3.5 = \$ 1,40,000

Absolute Costs every year = \$1,80,000

Misfortune = \$40,000

Since the organizations is causing misfortunes, it is more unsafe to maintain the business and I would propose them to close down else, they will be under tremendous obligation trusting that the market will rise.

Calculate the price
Pages (550 words)
\$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with TheBestPaperWriters
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Excellent timely work
Customer 452451, April 19th, 2023
Anthropology
excellent loved the services
Customer 452443, September 23rd, 2022
English 101
Very good job. I actually got an A
Customer 452443, September 25th, 2022
Nursing
The paper was EXCELLENT. Thank you
Customer 452449, September 23rd, 2022
Job well done. Finish paper faster than expected. Thank you!
Customer 452451, October 3rd, 2022
Anthropology
Excellent services will definitely come back
Customer 452441, September 23rd, 2022
Architecture, Building and Planning
The assignment was well written and the paper was delivered on time. I really enjoyed your services.
Customer 452441, September 23rd, 2022
Psychology
Thanks a lot the paper was excellent
Customer 452453, October 26th, 2022
Excellent service - thank you!
Customer 452469, February 20th, 2023
Thank you!
Customer 452451, November 27th, 2022
Theology
Job well done and completed in a timely fashioned!
Customer 452451, November 18th, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend