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 that the annual capital cost is 10% of the total investment.At what production quantity per year would the brewery be indifferent between these two investment opportunities?

Question

Quizplus · Accepted Answer

The Answer of 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 that the annual capital cost is 10% of the total investment.At what production quantity per year would the brewery be indifferent between these two investment opportunities?

A Brewery Is Considering Two Potential Production Investments: Option a Costs