Ie150probset1

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150
Problem
Set
#1
 due
on
Wed,
July
15,
class
hours
 
 1. An
 agency
 that
 helps
 rehabilitate
 mentally
 ill
 patients
 has
 a
 $1,200,000
 lump‐sum
 annual
 budget
 appropriation.
 On
 top
 of
 this,
 the
 agency
 charges
 each
 patient
 $600
 a
 month
 for
 board
 and
 care.
 All
 of
 the
 appropriation
 and
 revenue
 must
 be
 spent.
 The
 variable
 cost
 for
 rehabilitation
 activities
 average
 $700
 per
 patient
 per
 month.
 The
 agency’s
 fixed
 costs
 are
 $800,000.

 a. How
many
patients
can
be
served
by
the
agency?
 b. Suppose
the
manager
of
the
agency
is
concerned
that
the
total
budget...
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