Question

Plant sizes get larger as you move from ATC-1 to ATC-4. Output ATC-1 ATC-2 ATC-3 ATC-4 1,500 $10 15 $20 $30 2,000 8 12 17 25 2,500 9 10 15 20 3,000 12 8 13 18 3,500 15 6 11 16 4,000 18 10 9 14 4,500 20 12 7 12 5,000 24 15 11 10 5,500 29 19 13 8 6,000 35 25 15 9 Which plant size would produce at the least cost for the 1,500-2,500 range of output?

Answer 1

For output range 1500-2500, plant size ATC-1 would give the lowest cost of producing output per unit.

This is because for the output range 1500-2500, plant size ATC-1 is yielding the lowest ATC values among all plant sizes from 1 to 4.

Note: Lowest plant sizes are circled in the above table at all output levels.