8. A businessman is thinking of opening a factory in one of these places in Ethiopia: Bahir Dar, or on the outskirt of Addis Ababa to produce high quality electronic components for computer. He has gathered data on fixed cost and variable cost as given in the Table; Per unit cost Location Fixed cost/year Material Variable labor Overhead Addis Abeba S 200,000 $ 0.20 $0.40 $0.40 Bahir Dar 180,000 0.25 0.75 0.75 Nazareth 170,000 1.00 1.00 1.00 A. Represent the costs graphically B. Over what range of annual volume is each location going to have a competitive advantage? C. What is the volume at the intersection?

8. A businessman is thinking of opening a factory in one of these places in Ethiopia: Bahir Dar, or on the outskirt of Addis Ababa to produce high quality electronic components for computer. He has gathered data on fixed cost and variable cost as given in the Table; Per unit cost Location Fixed cost/year Material Variable labor Overhead Addis Abeba S 200,000 $ 0.20 $0.40 $0.40 Bahir Dar 180,000 0.25 0.75 0.75 Nazareth 170,000 1.00 1.00 1.00 A. Represent the costs graphically B. Over what range of annual volume is each location going to have a competitive advantage? C. What is the volume at the intersection?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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