4. There are economies of scale in ranching, especially with re- gard to fencing

Question

4. There are economies of scale in ranching, especially with re- gard to fencing land. Suppose that barbed-wire fencing cost S10,000 per mile to set up. How much would it cost to fence a single property whose area is one square mile if that prop- erty also happens to be perfectly square, with sides that are each one mile long? How much would it cost to fence exactly four such properties, which together would contain four square miles of area? 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. Which is more costly-fencing in the four, one-square-mile properties or the single four-square-mile property? LO9.4 Now, consider how much it would cost

Explanation / Answer

ans.....
each side is one mile, each mile is $10,000, so 4 sides * 10,000 = $40,000
With four such properties, each side would be 2 miles. If we assume that the 4 plots are all touching in a square, we would add 2 sections each 2 miles long to divide each of the four properities for a total of 12 miles. at $10,000 a mile this would be $120,000.
To fence in a four square mile area, there would only be 4 sides of 2 miles each to fence in, instead of the additional fence area to divide up the parcels. 4 sides, 2 miles each is a total of 8 miles of fence and at $10,000 a mile this would be a cost of $80,000
It is more costly to fence in the four one-square mile properties than a single four-square mile property

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