1200 100.0 20 100 A company produces school buses. The graphs of the Cost function (red) and the Revenue function (blue) are given on the figure. (You may click on the figure to see a bigger version.) The horizontal axes represents quantity in number of units. Cost and Revenue are measured in thousands of dollars. Answer the following questions. 1. What are the fixed costs? Answer: thousand dollars. 2. Suppose the current level of production is 19 buses. Should the company produce 20 th bus? Answer "yes" or "no" 3. Between 0 and 100, approximately what level of production maximizes the profit? (Or minimizes the losses if the company doesn't make any profit). Answer:
1200 100.0 20 100 A company produces school buses. The graphs of the Cost function (red) and the Revenue function (blue) are given on the figure. (You may click on the figure to see a bigger version.) The horizontal axes represents quantity in number of units. Cost and Revenue are measured in thousands of dollars. Answer the following questions. 1. What are the fixed costs? Answer: thousand dollars. 2. Suppose the current level of production is 19 buses. Should the company produce 20 th bus? Answer "yes" or "no" 3. Between 0 and 100, approximately what level of production maximizes the profit? (Or minimizes the losses if the company doesn't make any profit). Answer:
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 5MC
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Transcribed Image Text:1200
100.0
20.0
F20
100
-100
A company produces school buses. The graphs of the Cost function (red) and the Revenue function (blue) are given on the figure. (You may click on the
figure to see a bigger version.) The horizontal axes represents quantity in number of units. Cost and Revenue are measured in thousands of dollars.
Answer the following questions.
1. What are the fixed costs? Answer:
thousand dollars.
2. Suppose the current level of production is 19 buses. Should the company produce 20 th bus? Answer "yes" or "no"
3. Between 0 and 100, approximately what level of production maximizes the profit? (Or minimizes the losses if the company doesn't make any profit).
Answer:
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