A brewery is considering two potential production investments: Option A costs an initial $2 million and will involve constant marginal cost...

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A brewery is considering two potential production investments:

Option A costs an initial $2 million and will involve constant marginal cost of $5

option B costs an initial $4 million and will involve constant marginal cost of $3

 

In order to make the calculations simple, assume the annual capiital cost is 10% of the total investment.  At what production wuantity per year would the brewery be indifferent between these two investment opportunities?

 

A. 20000

B.100000

C. 200000

D. 150000

    • 7 years ago
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