Question

A taxi firm charges a fixed cost of $10 together with a variable cost of $3 per mile. (a) Work out the average cost per mile for a journey of 4 miles. (b) Work out the minimum distance travelled if the average cost per mile is to be less than $3.25

Answer 1

$5.5 per mile

40 miles

Explanation:

Given :

Fixed cost = $10

Variable cost = $3

For a journey of 4 miles ;

Cost = fixed cost + Variable Cost

Cost = $10 + $3x

x = number of miles

Cost = $10 + $3(4)

Cost = $10 + $12 = $22

Average cost per mile for a journey of 4 miles

Cost / number of miles

$22 / 4 = $5.5 per mile

Minimum distance if average per mile is to be less Than 3.25

$3.25 = (10 + 3x) / x

3.25x = 10 + 3x

3.25x - 3x = 10

0.25x = 10

x = 10 / 0.25

x = 40 miles