5. Ocean water contains 25 grams of gold per ton. Method A costs P27,500 per ton of water processed and will recover 90% of the metal. Method B costs P20,000 per ton of water processed and will recover 60% of the metal. The two methods require the same capital investment and can produce the same amount of gold each day. If the extracted gold can be sold for P87,500 per 30 grams, which method should be recommended? The supply of ocean water is essentially unlimited. Hint: Work this problem based on profit per gram of gold extracted.

5. Ocean water contains 25 grams of gold per ton. Method A costs P27,500 per ton of water processed and will recover 90% of the metal. Method B costs P20,000 per ton of water processed and will recover 60% of the metal. The two methods require the same capital investment and can produce the same amount of gold each day. If the extracted gold can be sold for P87,500 per 30 grams, which method should be recommended? The supply of ocean water is essentially unlimited. Hint: Work this problem based on profit per gram of gold extracted.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter20: The Problem Of Adverse Selection Moral Hazard

Section: Chapter Questions

Problem 3MC

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