econmoics question 2

timer Asked: Nov 16th, 2015

Question description

A manufacturing company is considering two potential investments:

Option 1 costs an initial $2,000,000 and will involve constant marginal cost of five dollars per unit.

Option 2 costs an initial $4,000,000 and will involve constant marginal cost of three dollars per unit

If the annual capital cost is 10% of the total investment, at what production quantity per year would the company be indifferent between these two investment opportunities?

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