module 3 deliverable

User Generated

nsebchax

Economics

Description

I will attach the excel sheet needed for completion and also the grading rubric for this assignment.

Competency

Elasticity, consumer choice, utility, productivity, and nature of costs.

Course Scenario

Oil Company X is a large oil refinery which has been expanding and taking on new investment projects. Recently, they have considered building a pipeline that stretches across the United States, from Canada to New Orleans.

You are a member of the Cost Department. At a recent meeting of the board of directors, it was estimated that the cost of building the pipeline would be two million dollars in total for the production of a 30,000-mile stretch, $5,000 of which is a fixed cost in taxes. They also want you to determine if the currently available alternative energy source is a strong substitute good for oil, which may interfere with expected profits from this venture.

Instructions

As a cost analyst at your firm, you are asked to evaluate the marginal cost of producing the pipeline per 1,000-mile stretch as well as the average total cost of producing the pipeline per 1,000 miles. Submit a 2-page report detailing the cost. Include calculations in your Word document.

You will also include a table showing the final figures for the following costs:

  1. Total Fixed Cost
  2. Total Variable Cost
  3. Average Variable Cost
  4. Average Fixed Cost
  5. Marginal Cost

Be sure to also include a calculation of the cross-price elasticity of the alternative energy source and oil. Assume the current price of oil is $50/gallon. If the price increases to $55/gallon of crude oil, the quantity demanded of the alternative energy source increases by 20%.

Is this a complementary good, a substitute good, or a non-related good? If there is a relationship, indicate whether the relationship is weak or strong. Justify your answer with an explanation.

Format your proposal to include a title page, introduction, conclusion, and references. Include all relevant graphs, equations, and calculations. Show your work on calculations to ensure you receive partial credit for incorrect answers. No credit will be given if your work is not shown. Remember to cite your sources using correct APA format, and also use correct grammar, spelling, and formatting.


Unformatted Attachment Preview

Quantity (miles of pipeline) 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 21,000 22,000 23,000 24,000 25,000 26,000 27,000 28,000 29,000 30,000 Total Cost $ 5,000 $ 11,573 $ 18,208 $ 29,267 $ 44,750 $ 64,657 $ 88,987 $ 117,740 $ 150,918 $ 188,518 $ 230,543 $ 276,991 $ 327,863 $ 383,159 $ 442,878 $ 507,021 $ 575,587 $ 648,577 $ 725,991 $ 807,828 $ 894,089 $ 984,774 $ 1,079,882 $ 1,179,414 $ 1,283,370 $ 1,391,749 $ 1,504,552 $ 1,621,778 $ 1,743,429 $ 1,869,502 $ 2,000,000 Total Total Fixed Cost Variable Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost F F B A 0 Did not Submit Not Submitted Not Submitted Not Submitted 1 3 4 No Pass Competence Proficiency Mastery Introduction and conclusion Introduction and conclusion Introduction and/or conclusion summarized the various costs, Introduction and conclusion summarized the various costs, did not summarize the various summarized the various costs using clear supporting using clear supporting costs. evidence. evidence and a well-defined synopsis of the report goals. Calculation of total variable Calculation of total variable Calculation of total variable cost and total fixed cost Calculation of total variable cost and total fixed cost is cost and total fixed cost is cost and total fixed cost is correct, using clear examples included, but unclear or correct. correct, using clear examples and well-defined reasons for incorrect. proposal recommendation. Calculation of average variable Calculation of average variable Calculation of total average cost is correct, using clear cost included, but unclear or Calculation of average variable variable cost is correct, using examples and well-defined cost is correct incorrect clear examples. reasons for proposal recommendation Calculation of average fixed Calculation of average fixed Calculation of total average Calculation of average fixed cost is correct, using clear cost included, but unclear or fixed cost is correct, using examples and well-defined cost is correct incorrect clear examples. reasons for proposal recommendation. Calculation of marginal cost is Calculation of marginal cost included, but unclear or Calculation of marginal cost is Calculation of marginal cost is correct, using clear examples correct incorrect correct, using clear examples and well-defined reasons for proposal recommendation, Calculation of cross-price Calculation of cross-price Calculation of cross-price Calculation of cross-price elasticity is correct, and elasticity is correct, relationship elasticity included, but unclear is correctly identified, and elasticity is correct. relationship is correctly or incorrect explanation of strength of identified. relationship is well justified. F c с B Not Submitted Not Submitted Not Submitted F A
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Explanation & Answer

Attached.

Module 3 Deliverables

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Introduction
Oil Company X has recently considered building a pipeline that stretches across the U.S, from
Canada to New Orleans. As an alternative investment, they are considering increasing
production at existing facilities. In order to compare these investment opportunities, I was tasked
with determining the marginal cost of producing the pipeline per 1,000-mile stretch as well as the
average total cost of producing the pipeline per 1,000 miles. Additionally, I am to determine if
the currently available alternative energy source is a strong substitute good for oil, which ...


Anonymous
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