There are economies of scale in ranching especially with reg

There are economies of scale in ranching, especially with regard to fencing land. Suppose that barbed-wire fencing costs $20,000 per mile to set up Instructions: Enter your answers as whole numbers a. How much would it cost to fence a single property whose area is one square mile if that property also happens to be perfectly square, with sides that are each one mile long? 80,000 b. How much would it cost to fence exactly four such properties separately, which together would contain four square miles of area? c.Now, consider how much it would cost to fence in four square miles of ranch land if, instead, it comes as a single large square that is two miles long on each side. d. Which is more costly-fencing in the four, one-square-mile properties or the single four-square-mile property?

Solution

Fencing costs 20000 per mile.

a) To fence an area of of a one square mile property whose each sides are one mile long is,

To fence a side of one mile long, 20000 is required.

To fence all the 4 sides all of which are one mile long 4*20000 = 80000 is required.

b) To fence one property of area one square mile, 80000 is required.

To fence four such properties separately, 4*80000 = 320000 is required.

c)To fence a one mile long side 20000 is required.

To fence a two mile long side, 2*20000 = 40000 is required.

To fence four sides each of which are two mile long, 4*40000 = 160000 is required.

d) Comparing the above findings it can be said that fencing the four, one square mile properties separately is much more costly than fencing a single four square mile property.