Use the following information to answer Questions 39 - 43
Jim's Production is planning on acquiring a competitive firm with a view to change production technologies.The two firm technologies produce the same output but with different cost functions.Jim's Production technology has a cost function = 1000 + 0.10Q whereas the competitor's cost function = 500 + 0.15Q.
-At what quantity is Jim's Production indifferent between two technologies?
A)5000
B)7500
C)10000
D)12500

Question

Quizplus · Accepted Answer

To find the quantity at which Jim's Production is indifferent between the two technologies, we need to set their cost functions equal to each other and solve for Q:

1000 + 0.10Q = 500 + 0.15Q 
0.05Q = 500 
Q = 10000

Therefore, Jim's Production is indifferent between the two technologies at a quantity of 10,000.

Since Jim's Production has a lower cost function, it would be best for them to adopt their own technology rather than the competitor's technology. This would result in lower costs and higher profit margins for Jim's Production. Therefore, the best choice is to stick with Jim's Production technology.

Use the Following Information to Answer Questions 39 - 43