Managerial Economics Homework Problem Help please. Points will be awarded to first correct answer!?

Posted on 2014-04-11 10:31:00 in Economics by BRUNO

HomeGrown is a small restaurant that specializes in serving local fruits, vegetables and meats. The company has chosen to enter into a long-term relationship with Family Farms, a local farming operation. The two parties have decided to enter into a long-term contract where Family Farms will supply produce to HomeGrown at specified prices and volume each year. Before signing a contract, HomeGrown is trying to decide how long the contract should be. It estimates that each year the contract covers saves the restaurant $1,600 in bargaining and opportunism costs. However, each year the contract covers also requires more legal fees. HomeGrown estimates that the number of hours it will need from lawyers, L, has a quadratic relationship with the number of years on the contract so that L = Y2 where Y is the number of years for the contract. If HomeGrown’s lawyers charge $120 per hour, how long should the contract be?



How many years rounded to 1 decimal place?



A lot of points will be awarded to first right answer

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