Giocattolo is a profit-maximizing firm producing toy cars, which it can produce and sell in its home country, Italy, and abroad in Spain. The averagecost (AC) curve on the following graph represents Giocattolo's cost of producing toy cars within one factory, whether in Italy or in Spain.COST (Dollars per toy car)101010I120 30 40 50 60 7080QUANTITY (Thousands of toy cars)AC90 100Suppose that at the current market price of toy cars, the demand for Giocattolo's product is 10,000 toy cars per year in Italy and 20,000 toy cars peryear in Spain. (Hint: Select each point on the previous graph to see its coordinates.)(?)Based on Giocattolo's average cost curve, within one factory it can produce 20,000 toy cars at Sper toy car, and produce the total of 30,000 toy cars at Sper toy car.Complete the following table by indicating Giocattolo's total production cost for each scenario.Total Production Cost(Dollars)ScenarioProduce 10,000 toy cars in Italy and 20,000 toy cars in Spain.Produce 30,000 toy cars at the same factory.per toy car, produce 10,000 toy cars atNow suppose that if Giocattolo produces toy cars in one country and sells them in the other, it incurs an additional shipping cost equal to $2.00 pertransported toy car.If Giocattolo produces 30,000 toy cars in Italy and transports 20,000 of them to Spain, its total cost of production and shipping isSIf Giocattolo produces 30,000 toy cars in Spain and transports 10,000 of them to Italy, its total cost of production and shipping isSO Produce 30,000 toy cars in Italy and ship 20,000 toy cars to Spain.O Produce 30,000 toy cars in Spain and ship 10,000 toy cars to Italy.O Produce 30,000 toy cars in either Italy or Spain.O Produce 10,000 toy cars in Italy and 20,000 toy cars in Spain.Based on Giocattolo's production and shipping costs determined in the previous questions, which of the following is Giocattolo's best productionstrategy?

Since the AC curve is given to us, we match corresponding quantities to price. Please match these…

Suppose that at the current market price of toy cars, the demand for Giocattolo's product is 10,000 toy cars per year in Italy and 20,000 toy cars per year in Spain. (Hint: Select each point on the previous graph to see its coordinates.)

Suppose that at the current market price of toy cars, the demand for Giocattolo's product is 10,000 toy cars per year in Italy and 20,000 toy cars per year in Spain. (Hint: Select each point on the previous graph to see its coordinates.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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