This is a graph of our firm’s costs. Label the lines on the graph using the following labels: average fixed cost (AFC), average variable cost (AVC), average total cost (ATC) and marginal cost (MC). Then label the shut down and breakeven points on the graph. The accountants claim that we are at our profit maximizing point. You decide to investigate potential diseconomies of scale. What diseconomies of scale do you think you might find? How could these be addressed and hopefully decrease costs? (20 points)

This is a graph of our firm’s costs. Label the lines on the graph using the following labels: average fixed cost (AFC), average variable cost (AVC), average total cost (ATC) and marginal cost (MC). Then label the shut down and breakeven points on the graph. The accountants claim that we are at our profit maximizing point. You decide to investigate potential diseconomies of scale. What diseconomies of scale do you think you might find? How could these be addressed and hopefully decrease costs? (20 points)

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter4: Economic Evaluation In Health Care

Section: Chapter Questions

Problem 7QAP

See similar textbooks

Similar questions

What is the atc of 5 units? A 50 B 52 C 53 D 55
Ella Ltd recently started to manufacture and sell productDG. The variable cost of product DG is £4 per unit and the totalweekly fixed costs are £18 000.The company has set the initial selling price of product DG byadding a mark up of 40 per cent to its total unit cost. It has assumedthat production and sales will be 3000 units per week.The company holds no stocks of product DG.Required:(a) Calculate for product DG:(i) the initial selling price per unit; and(ii) the resultant weekly profit. The management accountant has established that alinear relationship between the unit selling price (P in £)and the weekly demand (Q in units) for product DG isgiven by:P = 20 - 0:002QThe marginal revenue (MR in £ per unit) is related to weeklydemand (Q in units) by the equation:MR = 20 - 0:004Q(b) Calculate the selling price per unit for product DG that shouldbe set in order to maximize weekly profit. (c) Distinguish briefly between penetration and skimming pricingpolicies when launching a new…
The owner shop is contemlating adding anew product which will require additional mouthly payment of 6000, variable costs would be brirr. 2 per new product & its selling price is brirr. 7 each How many new products must be sold in order to break even point?
Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data: Variable costs (per unit) ($) Process type Annualized fixed cost labor material energy Of plant & equip. Intermittent $1,000,000 24 26 20 Mass customization $1,190,000 30 18 12 Repetitive $1,385,000 28 15 11 Continuous $1,660,000 25 15 10 Determine the most economical…
Hand written asap..solve 20 mins..i'll rate
Calculate Economic Order Quantity (EOQ), number of orders, annual ordering costs, annual carrying costs and total inventory costs from the following:Annual consumption: 6000 units ; Cost of placing one Order: RO 60Carrying cost per unit: RO 2
Organic foods purchases 600lb. Of strawberries at $0.85 per pound. They use a 56% markup based on cost. They know from experience that 20% of the strawberries will spoil and will need to be composted. What will be the original full price that they put on the strawberries?
1 Vehicle purchase. A student living in Lower Hutt is considering the purchase of a newvehicle. An electric vehicle (EV) can be purchased for $40,000 and has a running cost of $0.20per km. Alternatively, a (petrol) combustion vehicle (CV) can purchased for $25,000 and has arunning cost of $0.45 per km. The student is determined to make a decision which minimisesthe total cost depending on the number of kilometres that the vehicle will be used.(Here you should assume that the running costs also account for periodic costs such as mainte-nance, insurance, registration.)(a) Describe the decision and environment variables associated with this problem.(b) Determine the utility function R(D, X) which maps the outcomes to the total cost incurred.(c) Use a break-even analysis to determine the number of km for which the optimal decisiondiffers above and below this amount. Specifically, plot R(D, X), determine where thebreak-even point occurs and mark it clearly on your plot, then briefly…
A company's unit costs based on 500,000 units are: Variable costs $32 Fixed costs 20 The normal unit sales price per unit is $110. A special order from a foreign company has been received for 4,000 units at $90 a unit. In order to fulfill the order, 2,000 units of regular sales would have to be foregone. The opportunity cost associated with this order is A) $64,000. B) $180,000. C) $220,000. D) $156,000.
Heinrich is a manufacturing engineer with the Miller Company. He has determined the costs of producing a new product to be as follows: Equipment cost: $288,000/year Equipment salvage value at EOY5 = $41,000 Variable cost per unit of production: $14.55 Overhead cost per year: $48,300 If the Miller Company uses a 5-year planning horizon and the product can be sold for a unit price of $39.75, how many units must be produced and sold each year to break even?
Estimate the total cost of a house (from purchasing a lot to furnishing it) using the following estimates: Cost Data House Data Purchasing a lot = $2.50/ft2 Lot size = 100 × 150 ft Construction = $125/ ft2 of livable space House size = 50 × 46, with 75% livable Furnishings = $3000 per room Number of rooms = 6
Company X has $ 938529 in annual fixed costs. The primary product generates $ 7.98 in revenue per unit and has variable costs of $5.50. The annual breakeven quantity is ____ units.