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1. A firm is about to undertake the manufacture of a product, and is weighing the process configuration options. There are two intermittent processes under consideration, as well as a repetitive focus. The smaller intermittent process has fixed costs of $3,700 per month, and variable costs of $9 per unit. The larger intermittent process has fixed costs of $14,100/mt. and variable costs of $3 per unit. A repetitive focus plant has fixed costs of $60,000/mt. and variable costs of $1.50 per unit. (Round all answers to the nearest whole unit)
a. Write the TC equation for each process in the form TC = TFC + vc/unit x Q
b. At what output does the large intermittent process become cheaper than the small one?
c. At what output does the repetitive process become cheaper than the larger intermittent process?
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