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Q. An existing company is considering expanding into a new product line that will use the same factory as its existing products. The fixed costs for the existing factory are $10,000 a year, where the factory currently produces 100 units. To launch the new line, the company would have to buy new equipment with a fixed cost of $1000. The cost of labor and capital to produce each unit of the new good is $60. The inverse demand for the new product is given by P=76 -.8Q.
What is the cost function for the new product line?
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