Waec Model Questions Vol1 2025 Economics Question 20

A company can transport its product from a farm to a market 300 km away using either trucks or rail. The cost structure is as follows: • Truck: fixed cost per trip ₦50,000, variable cost ₦2,000 per km, capacity 10 tonnes per trip, speed 60 km/h. • Rail: fixed cost per trip ₦120,000, variable cost ₦800 per km, capacity 30 tonnes per trip, speed 40 km/h. For rail, the first three trips are charged at the full fixed cost, but each additional rail trip beyond the third enjoys a 20 % discount on the fixed cost (i.e., fixed cost becomes ₦96,000 for trips 4, 5, …). The company must deliver exactly 150 tonnes. Trips may be fractional, but each trip incurs its full (discounted where applicable) fixed cost. Determine the combination of truck trips and rail trips that minimises total transportation cost and state that minimum cost.