The estimated cost for a multitube cyclone system with a capacity of 60,000 cubic feet per minute is $450,000. (a) If the $200,000 actual cost for a 35,000 cubic feet per minute system was used in the cost-capacity equation, what was the value of the exponent? (b) What can be concluded about the economy of scale of the costs between the two systems?

The estimated cost for a multitube cyclone system with a capacity of 60,000 cubic feet per minute is $450,000. (a) If the $200,000 actual cost for a 35,000 cubic feet per minute system was used in the cost-capacity equation, what was the value of the exponent? (b) What can be concluded about the economy of scale of the costs between the two systems?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter9: Applications Of Cost Theory

Section: Chapter Questions

Problem 1.6CE

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