Ski Boards, Inc., wants to enter the market quickly with a new linish on its ski boards. It has three choices (a) refurbish the old equipment at a cost of $250, (b) make major modifications at the cost of $1,000, or (c) purchase new equipment at a net cost of $1,750. If the firm chooses to refurbish the equipment, materials and labor will be $1.10 per board. If it chooses to make modifications, materials and labor will be $0.75 per board. If it buys new equipment, variable costs are estimated to be $0.40 per board. a) On the graph to the right, use the line drawing tool to draw the total cost curve for each option. Label the curves TC, TC, and TCC, respectively. Note: Carefully follow the instructions above and only draw the required objects. ID

Ski Boards, Inc., wants to enter the market quickly with a new linish on its ski boards. It has three choices (a) refurbish the old equipment at a cost of $250, (b) make major modifications at the cost of $1,000, or (c) purchase new equipment at a net cost of $1,750. If the firm chooses to refurbish the equipment, materials and labor will be $1.10 per board. If it chooses to make modifications, materials and labor will be $0.75 per board. If it buys new equipment, variable costs are estimated to be $0.40 per board. a) On the graph to the right, use the line drawing tool to draw the total cost curve for each option. Label the curves TC, TC, and TCC, respectively. Note: Carefully follow the instructions above and only draw the required objects. ID

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

Ski Boards, Inc., wants to enter the market quickly with a new finish on its ski boards. It has three choices:
(a) refurbish the old equipment at a cost of $250,
(b) make major modifications at the cost of $1,000, or
(c) purchase new equipment at a net cost of $1,750.
If the firm chooses to refurbish the equipment, materials and labor will be $1.10 per board. If it chooses to
make modifications, materials and labor will be $0.75 per board. If it buys new equipment, variable costs are
estimated to be $0.40 per board.
a) On the graph to the right, use the line drawing tool to draw the total cost curve for each option. Label the
curves TC, TCb, and TCC, respectively.
Note: Carefully follow the instructions above and only draw the required objects.
CUPC
Dollars
8,000T
7,500-
7,000
6,500-
6,000-
5,500-
5,000-
4,500-
4,000
3,500-
3,000
2,500-
2,000-
1,500-
1,000
500-
0-
0
1,000
2,000 3,000 4,000
Boards
5,000

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