2. Oswego Machine Company (OMC) produces 9,000 multipurpose pliers that sell for $9.50 each.  Its present cost function is estimated to be:           TC = 25,000 + 3.7Q           However, OMC is considering renovating its facilities.  The new, technologically advanced plant would have an estimated cost function of:           TC = 34,000 + 2.5Q The marketing department claims that the demand for the pliers fits a normal distribution with an expected mean value of 14,000 units per year. What are the current TC, TFC, TVC, ATC, and MC? What is the break-even point for both plant designs? Would you be in favor of renovating the plant?

ENGR.ECONOMIC ANALYSIS
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2. Oswego Machine Company (OMC) produces 9,000 multipurpose pliers that sell for $9.50 each. 

Its present cost function is estimated to be:

          TC = 25,000 + 3.7Q

          However, OMC is considering renovating its facilities. 

The new, technologically advanced plant would have an estimated cost function of:

          TC = 34,000 + 2.5Q

The marketing department claims that the demand for the pliers fits a normal distribution with an expected mean value of 14,000 units per year.

  • What are the current TC, TFC, TVC, ATC, and MC?
  • What is the break-even point for both plant designs?
  • Would you be in favor of renovating the plant?
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