(Answered) Suppose a company is producing 1000 units of bottled power

Economics

Suppose a company is producing 1000 units of bottled power drink priced at $5. It is using a manufacturing process with a fixed cost of $1450 and a variable cost of $2.75 per unit (AVC).

Calculate the DOL and break even point for this production process. Is the company breaking even.

If the company installs updated machinery its fixed costs rise to $2000 and AVC drops to $2.25. Calculate the DOL and break even point.

At what production level should the company switch from the old machinery to the upgraded one.

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Microeconomics, Economics

Category:- Microeconomics
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