Explain how the answer is inota

Assignment Help Business Economics
Reference no: EM133130412

Problem:

SMELTER

COUNTRY

COMPANY

CAPACITY

VARIABLE COST

FIXED COST

Sorocaba A

Brazil

Other

122

588

238

Zaporozhye

Ukraine

CIS

100

599

122

Grand Baie

Canada

Alcan

180

602

269

Arvida 1

Canada

Alcan

85

668

472

Alouette

Canada

Other

215

692

279

Irkutsk

Russia

CIS

260

712

126

Bratsk

Russia

CIS

850

757

138

Baie Comeau 1

Canada

Reynolds

159

779

390

Boyne Island

Australia

Comalco

244

807

225

Sao Luis

Brazil

Other

357

875

226

Valco

Ghana

Kaiser

200

887

194

Badin B

USA

Alcoa

57.5

920

319

Hannibal

USA

Other

245

946

332

Sundsvall 1

Sweden

Other

76.5

985

335

Lynemouth

UK

Alcan

130

1,024

308

Jebel Ali

Dubai (UAE)

State

245

1,061

88

Fushun 2

China

State

450

1,166

97

Inota

Hungary

State

33.65

1,271

196

Korba

India

State

100

1,518

100

Renukoot B

India

State

30

2,070

110

If these were the only aluminum plants in the world, the most aluminum that could possibly be produced would be their total capacity: 4139.65 tons.

How should we start figuring out what goes on-or what should go on-in this market? Let's think about who would produce aluminum at a given price.

What if worldwide demand were 4000 tons - which would be the "last" plant that produces in this case?

Fushun 2

Fushun 2, together with all the plants with lower variable costs, would bring worldwide production to 3976 tons.

Inota

The plants with variable costs less than Inota's can produce only 3976 tons. Inota is the last, most expensive plant necessary to reach 4000 tons of production.

Korba

4000 tons can be produced even if only plants with lower variable costs than Korba's are in action.

Renukoot B

4000 tons can be produced even if only plants with lower variable costs than Renukoot B's are in action.

Please explain how the answer is INOTA . What was I supposed to add together to get to 4000.

Reference no: EM133130412

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