Question

1) The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes...

1) The variety of Riverside Ranger logo T-shirts
includes 12 different designs. Setup between
designs takes one hour (and $18,000), and,
after setting up, you can produce 1,000 units
of a particular design per hour (at a cost of
$8,000). Does this production exhibit scale
economies or scope economies?

2) Suppose you have a production technology that
can be characterized by a learning curve. Every
time you increase production by one unit, your
costs decrease by $6. The first unit costs you
$64 to produce. If you receive a request for proposal
(RFP) on a project for four units, what
is your break-even price? Suppose that if you
get the contract, you estimate that you can win
another project for two more units. Now what
is your break-even price for those two units?

Homework Answers

Answer #1

1) Ans - Economies of scale

Explanation:

Here total cost = 18000 + (8000/1000)*Q

TC = 18000 + 8Q

ATC = TC/Q = 18000/Q + 8

It means ATc will fall as Q is rising means economies of scale.

Scope economies arise when the firm produce different products together so total production cost of producing the two goods together is less than the cost of producing them separately. But here there is no such case so economies of scale is correct answer.

2)

Quantity(Units) MC TC AC = TC/Q
1 64   64 64
2 58 122 61
3 52 174 58
4 46 220 55
5 40 260 52
6 34 294 49

Break-even price for four units = 220/4  = $55

Break-even price for those next two units (i.e., 5th and 6th units) alone = (40 + 34) / 2 = $37

** we are only allowed to do 1st question, however i answer both the questions. please hit like, if satisfied**

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes one...
The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes one hour (and $18,000), and, after setting up, you can produce 1,000 units of a particular design per hour (at a cost of $11,000). Note: Assume QQ denotes the quantity produced of a particular design. Which of the following best represents the average cost function for producing any single design? A. AC=$18,000Q+$11AC=$18,000Q+$11 B. AC=$18,000+$11QAC=$18,000+$11Q C. AC=$18,000+$11AC=$18,000+$11 D. AC=$18,000+$11,000AC=$18,000+$11,000 Based on this information, production in any...
1. Project with which of the following characteristic(s) provide value and thus positive NPVs to firms?...
1. Project with which of the following characteristic(s) provide value and thus positive NPVs to firms? A Economies of Scale B Product differentiation C Cost advantages D Access to distribution channels E Favorable governmental or regulatory environments 2. Fill in the Blanks Your firm pays $3,000 per month in fixed costs. You also pay $15 per unit to produce your product. What is your total cost if you produce 1,000 units? What if you produce 5,000 units? 3. The Motor...
A novelty coffee mug manufacturer produces 5 different designs that are sold at tourist information kiosks....
A novelty coffee mug manufacturer produces 5 different designs that are sold at tourist information kiosks. The demand requirements for the coming tourist season is as follows: Design A B C D E Demand (units) 500 750 600 800 450 The mugs can all be produced in the same workstations, but require different processing and setup times. The production information is in the following table: Design A B C D E Batch Size (units) 50 50 50 50 50 Setup...
Value-Added and Non-Value-Added Costs, Unused Capacity For Situations 1 through 6, provide the following information: An...
Value-Added and Non-Value-Added Costs, Unused Capacity For Situations 1 through 6, provide the following information: An estimate of the non-value-added cost caused by each activity. If required, round your final answer to the nearest dollar. The root causes of the activity cost (such as plant layout, process design, and product design). The appropriate cost reduction measure: activity elimination, activity reduction, activity sharing, or activity selection. Choose " Multiple" in the Root cause column, wherever there is more than one root...
This basic information applies to all of the related questions: Alpha Assemblies produces a wide variety...
This basic information applies to all of the related questions: Alpha Assemblies produces a wide variety of products in their central Nebraska facility. Many of these products fit within a line of standard truck and trailer parts. Within this is a set of hitches that can be made in two sizes (1-1/4 and 2) and three strengths (light duty, medium duty, and heavy duty). All of the hitches in this line have "natural" finishes so no additional steps are necessary...
Project Details The Acme Gadget Company designs and manufactures consumer gadgets. Last year, Acme began development...
Project Details The Acme Gadget Company designs and manufactures consumer gadgets. Last year, Acme began development of three prototype gadgets with the intention of bringing all three to market. However, a recent downturn in the economy has forced Acme to reconsider due to decreased consumer demand that is projected to remain low for 2-3 years. As such, Acme will bring only one of the prototypes to market. They’ve hired a consulting firm to advise which prototype to bring to market....
Need answer to three parts tonight. So that I can check my work before submitting. I...
Need answer to three parts tonight. So that I can check my work before submitting. I submitted this request before. Please send to my email: For this activity, you have been hired as a team of consultants on a multi-year basis for a global washer and dryer manufacturer. They currently offer two core washer and dryer sets: a high-end model and an economic model. You are tasked to complete several calculations and present your findings to the company stakeholders. You...
Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large,...
Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. The company bought some land three years ago for $4.4 million in anticipation of using it as a toxic dump site for waste chemicals, but it...
Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large,...
Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. The company bought some land three years ago for $3.9 million in anticipation of using it as a toxic dump site for waste chemicals, but it...
The Business Case for Agility “The battle is not always to the strongest, nor the race...
The Business Case for Agility “The battle is not always to the strongest, nor the race to the swiftest, but that’s the way to bet ’em!”  —C. Morgan Cofer In This Chapter This chapter discusses the business case for Agility, presenting six benefits for teams and the enterprise. It also describes a financial model that shows why incremental development works. Takeaways Agility is not just about the team. There are product-management, project-management, and technical issues beyond the team’s control. Lean-Agile provides...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT