In all the previous challenges of #sixweekeconomics, this challenge 3 is what I can point At as my favorite; because of the logics it entails/demands.
So in this challenge, we are to pick one commodity, to be bought from one city and sold in one city.
Checking the price and/or cost distribution of commodities across the towns, only copper looks more profitable to invest upon; based on the modal/mean/average price distribution, it is the only commodity that it's cost/price in one town (Grudge Town(GT)) doubles it's cost/price is another town (Meteor City(MC)).
Hence, I choose copper as the commodity to invest upon
I choose meteor city to buy Copper from
I choose Grudge Town to sell copper to
""Reason behind my choice of Commodity /City""
As it is known that the aim of doing business is to make reasonable profit: a business man would always cherish that the ratio of the cost (represented by C) of procurement of his merchandise, to the price (represented by P) of selling the merchandise, should/to be C:(P>C) simply put, 1:{2,3,4,...}. Everyone likes to buy at a very low cost and sell at a very high price, to make reasonable profit.
""1. Calculations Based on Average Cost/Price Distribution""
""A. Procurement of copper from MC, with $10million""
Total Capital = $10,000,000
Average Price per pound of copper in MC = $2.5/pound
Pounds of copper purchasable = $10,000,000/$2.5 = 4,000,000 pounds of copper.
""B. Sales of 4million pounds of Copper in GT""
Average price per pound of copper in GT = $5/pound
Amount of 4million pounds of copper in GT = 4,000,000 * $5 = $20,000,000
The % profit = [$(20million - 10million) / $10million] * 100
= 100% profit.
""2. My Risk Calculations""
However, in a worst case:
If the available cost of copper per pound in meteor city should be above the mode/average ($2.6),
And if the available price per pound of copper in Grudge Town should be below the average/mode ($4):
""A. Procurement of Copper in Meteor City, at the highest cost""
highest cost/pound = $2.6
$10million would approximately procure $10,000,000 / $2.6
= 3,846,153.85 pounds of copper
""B. Sales of 3,846,153.85 pounds of copper at the lowest rate of $4/pound, grudge Town""
lowest price/pound in GT = $4
selling 3,846,153.85 pounds of copper will yield 3,846,153.85pounds * $4
= $15,384,615.385
"
The % profit = [$(15,384,615.385 - 10,000,000) / $10,000,000] * 100
= 53.846% profit.
In conclusion, the %profit (%p) of trading with copper would be best mathematically represented as;
(53.84 </= %p </= 100)%
Thank you for reading my idea.
Thanks, @spectrumecons