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A firm is considering two potential investments:
Option A costs an initial $2 million and will involve constant marginal cost of $5.
Option B costs an initial $4 million and will involve constant marginal cost of $3.
Assume the annual cost of capital is 10% of the total investment( this represents annual fixed cost of the initial investment). At what production quantity per year would the brewery be indifferent between the two investment opportunities?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9491792

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