Competitive bidding process, Macroeconomics

Assignment Help:

After a competitive bidding process, Firm G wins a contract to collect and dispose of Firm H's hazardous waste for $1,000 per year. Firm G's labor costs are $200 per year, and because of the unique nature of the waste, it has to invest $8,000 in a special made-to-order furnace-money that it could otherwise have put in the bank at 10 percent interest. Thus, the annualized cost of the investment is $800. So specialized is the furnace that, were the contract canceled, Firm G could only scrap it and receive $1,500 for the metal.
a) By how much could Firm H threaten to cut the fee if subsequently some dispute arises over the terms of the contract, or if the contract comes up for renewal?

b) By how much could Firm H threaten to cut the fee if the furnace can be adjusted, at a cost of $3,000, to handle the waste of Firm J, which is willing to pay $700 per year for that service?


Related Discussions:- Competitive bidding process

Homework Help, An unanticipated demand-pulled inflation would normally lead...

An unanticipated demand-pulled inflation would normally lead to all the following problems except?

High blood pressure affected, To determine whether high blood pressure affe...

To determine whether high blood pressure affected whether a person had a stroke, a sample of 129 people who had had strokes are examined. In the sample, 39% had high blood pressure

Insurance firm processes claims, Your Insurance firm processes claims throu...

Your Insurance firm processes claims through its newer, larger high tech facility and its older, smaller low-tech facility. Each month, the high-tech facility handles 10,000 claims

Distinction between charasteristics of private and public, Use the distinct...

Use the distinction between the charasteristics of private and public goods to determine whether the following should be produced through the market system or provided by the gover

As-ad model with inflation, The AS-AD model with inflation When we remo...

The AS-AD model with inflation When we remove assumption of constant prices to allow varying real wages. Resulting model was known as AS-AD model. Similarly we now remove the a

What are the international economic crisis, What are the international econ...

What are the international economic crisis A current account surplus can only take place in one nation if there is a current account shortage in another country. So it makes no

How to evaluate total savings, Q. How to evaluate total savings? Total...

Q. How to evaluate total savings? Total savings Total savings S(r) depends positively on the real interest rate Remember that total saving

Determine elasticity of demand , Consider the consumption decisions of R.B....

Consider the consumption decisions of R.B. Turbo, a new student at T University. Ms. Turbo has only available $1,000 in monthly income to spend on food and housing. In te

Determine the long-term direct investment flows, Determine the Long-term di...

Determine the Long-term direct investment flows Long-term direct investment flows are when investors buy physical assets like land or capital equipment in another nation. This

Real exchange rates, Real Exchange Rates (EXCH) is the next variable that w...

Real Exchange Rates (EXCH) is the next variable that will be analysed in this VAR. The reason for including exchange rates in the VAR is that they are an important channel through

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd