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Choose either $1,350,000 or $1,750,000 to be the more appropriate fixed cost for a product layout, and consider the other value as the fixed cost for a process layout. Similarly, choose either $240 or $310 to be the variable costs for the layouts. Finally, assume a selling price per unit equal to $395.
(a) Find the level of production at which the two layouts are identical from a cost point of view.
(b) Find the level of production at which the process layout starts being profitable.
(c) Which layout is most cost-effective for a production level equal to 17,000 units?
Suppose two strategically dependent firms in an oligopolistic industry: Firms A and B. Firm A knows that if it offers extended warranties on its products but Firm B does not,
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Explain in detail how a decrease in consumer demand for a product will result in less of the product being produced and in fewer resources being allocated to its production.
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