1. Suppose that a manufacturer can produce a part for $8.00 with a fixed cost of$3,000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $10.00,which includes transportation. a. If the anticipated production volume is 1, 400 units, compute the total cost of manufacturing and the total cost of outsourcing. b. What is the best decision?
1. Suppose that a manufacturer can produce a part for $8.00 with a fixed cost of$3,000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $10.00,which includes transportation. a. If the anticipated production volume is 1, 400 units, compute the total cost of manufacturing and the total cost of outsourcing. b. What is the best decision?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
1. Suppose that a manufacturer can produce a part for $8.00 with a fixed cost of$3,000.
Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $10.00,which includes transportation.
a. If the anticipated production volume is
1, 400 units, compute the total cost of manufacturing and the total cost of outsourcing.
b. What is the best decision?
2. A bank developed a model for predicting the average checking and savings account balance as balanceequals - 16,079+398 x age+1,322 x
years education +0.125 xhousehold wealth.
a. Explain how to interpret the numbers in this model.
b. Suppose that a customer is 25 years old, is a college graduate (so that years education =16),and has a household wealth of $120,000.
What is the predicted bank balance?A.The number -16,079
The number 398
The number 1,322
The number 0.125
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