Managerial Economics

Jan 23rd, 2015
Price: $5 USD

Question description

Last year a toy manufacturer introduced a new toy truck that was a huge success. The company invested $2.5 million for plastic injection molding machine. (which could be sold for $2.0 million) and 100000 in plastic injection molds specifically for the toy (not valuable to anyone else). Labor and cost of material necessary to make each truck is about $3.00. This year a competitor has developed a similar toy that has significantly reduced demand for the toy truck. Now the original manufacturer is deciding whether they should continue production of the toy truck. If the estimated demand is 100000 trucks, what is the breakeven price for the toy trucks? Should you shut down?

Tutor Answer

(Top Tutor) Daniel C.
School: UCLA

Studypool has helped 1,244,100 students

Review from our student for this Answer

Jan 23rd, 2015
"Excellent job"
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1823 tutors are online

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors