Mr. Jack is in the process of expanding his manufacturing business. He decided to open a plant in the coming year. He has four locations in mind. The costs information for these locations is in the following table. Locations A B C D Fixed Cost 60,000 80,000 100,000 130,000 Variable Costs/units 30 20 15 10 a. i. Write an equation to represent the total costs for each location. ii. Draw the total costs lines for each location on the same axes. (Use output ranges of 2000, 4000, 6000, 8000 etc. and intervals of $50,000 on the Y axis. iii. Over what range of output is location A the most preferred location? iv. Over what range of output is location B the most preferred location? v. Over what range of output is location C the most preferred location?
Mr. Jack is in the process of expanding his manufacturing business. He decided to open a plant in the coming year. He has four locations in mind. The costs information for these locations is in the following table. Locations A B C D Fixed Cost 60,000 80,000 100,000 130,000 Variable Costs/units 30 20 15 10 a. i. Write an equation to represent the total costs for each location. ii. Draw the total costs lines for each location on the same axes. (Use output ranges of 2000, 4000, 6000, 8000 etc. and intervals of $50,000 on the Y axis. iii. Over what range of output is location A the most preferred location? iv. Over what range of output is location B the most preferred location? v. Over what range of output is location C the most preferred location?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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2. Mr. Jack is in the process of expanding his manufacturing business. He decided to open a plant in the coming year. He has four locations in mind. The costs information for
these locations is in the following table.
| Locations | A | B | C | D |
| Fixed Cost | 60,000 | 80,000 | 100,000 | 130,000 |
| Variable Costs/units | 30 | 20 | 15 | 10 |
a.
i. Write an equation to represent the total costs for each location.
ii. Draw the total costs lines for each location on the same axes. (Use output ranges
of 2000, 4000, 6000, 8000 etc. and intervals of $50,000 on the Y axis.
iii. Over what range of output is location A the most preferred location?
iv. Over what range of output is location B the most preferred location?
v. Over what range of output is location C the most preferred location?
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