8. A businessman is thinking of opening a factory in one of these places in Ethiopia: Bahir Dar, or on the outskirt of Addis Ababa to produce high quality electronic components for computer. He has gathered data on fixed cost and variable cost as given in the Table; Per unit cost Location Fixed cost/year Material Variable labor Overhead Addis Abeba S 200,000 $ 0.20 $0.40 $0.40 Bahir Dar 180,000 0.25 0.75 0.75 Nazareth 170,000 1.00 1.00 1.00 A. Represent the costs graphically B. Over what range of annual volume is each location going to have a competitive advantage? C. What is the volume at the intersection?

8. A businessman is thinking of opening a factory in one of these places in Ethiopia: Bahir Dar, or on the outskirt of Addis Ababa to produce high quality electronic components for computer. He has gathered data on fixed cost and variable cost as given in the Table; Per unit cost Location Fixed cost/year Material Variable labor Overhead Addis Abeba S 200,000 $ 0.20 $0.40 $0.40 Bahir Dar 180,000 0.25 0.75 0.75 Nazareth 170,000 1.00 1.00 1.00 A. Represent the costs graphically B. Over what range of annual volume is each location going to have a competitive advantage? C. What is the volume at the intersection?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

material cost depends on per unit of output

8. A businessman is thinking of opening a factory in one of these places in Ethiopia:
Bahir Dar, or on the outskirt of Addis Ababa to produce high quality electronic components
for computer. He has gathered data on fixed cost and variable cost as given in the Table;
Per unit cost
Location
Fixed cost/year
Material
Variable labor
Overhead
Addis Abeba
S 200,000
$ 0.20
$0.40
$0.40
Bahir Dar
180,000
0.25
0.75
0.75
Nazareth
170,000
1.00
1.00
1.00
A. Represent the costs graphically
B. Over what range of annual volume is each location going to have a competitive advantage?
C. What is the volume at the intersection?

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