Answer to Question #167523 in Macroeconomics for Cindy Boadiwaa Amponsah

Question

4) What minimum order value (MOV) should we set for the restaurants to be breakeven if our order commission is 25%, minimum delivery fee (paid by eaters) is 1.5 EUR and courier earnings (paid by Bolt) are 3.5 EUR?

Answer 1

Solution:

Calculate the total cost on the road:

Minimum delivery fee = 1.5 EUR + 3.5 EUR = 5 EUR

Calculate break-even point =$\frac{Cost}{Commission}$

= $\frac{5}{25\%}$ = 20 EUR

This means you have to deliver 20 EUR of product per hour to break even on your deliveries.

Therefore, the minimum order value (MOV) = 20 EUR