Learning Activity 1

Direction. Copy and answer the given problem below. Round your answer to 3 decimal
places and submit your answer as a PDF file thru our google classroom.

1. A friend of yours has been thinking about quitting her regular day job and
going into business for herself. She currently make 1,300,000.00 per year as
an employee of the Ajax Company, and she anticipates no raise for at least
another year. She believes she can make 6,000,000.00 as an independent
consultant in six-sigma “black belt” training for large corporations. Her start-
up expenses are expected to be 3,500,000.00 over the next year. If she
decides to keep her current job, what is the expected opportunity cost of this
decision? Do you think your friend’s decision is right? Why or Why not?
(10 points)

2. A municipal solid-waste site for a city must be located at Site A or Site B.

After sorting, some of the solid refuse will be transported to an electric power
plant where it will be used as fuel. Data for the hauling of refuse from each
site to the power plant are shown below:

Site A Site B
Average hauling distance 4.5 km 3.5 km
Annual rental fee for solid- 250,000.00 3,000,000.00
waste site
Hauling cost 75.00/m3-km 75.00/m3-km

If the power plant will pay 600.00 per cubic meter of sorted solid waste
delivered to the plant, where should the solid-waste site be located? Use
the city’s viewpoint and assume that 300,000 cubic meters of refuse
will be hauled to the plant for one year only. One site must be selected.
(10 points)