A radio manufacturer has two plants -- one in Taiwan and one in California.At the current allocation of total output between the two plants,the last unit of output produced in the Taiwan plant added $8 to total cost,while the last unit of output produced in the California plant added $6 to total cost.If the firm switches one unit of output from the California to the Taiwan plant,then

Question

Quizplus · Accepted Answer

Switching one unit of output from California to Taiwan increases the cost by $2 ($8 for the unit in Taiwan minus $6 saved from not producing it in California), thus decreasing profit by $2.

A Radio Manufacturer Has Two Plants -- One in Taiwan