Reference no: EM131424078
Assume that quantity produced = quantity demanded = quantity sold
Peter Neutron is the manager of a MailMax store which provides services such as copying, scanning, and faxing in a small university town.
Peter must replace an old copy machine and is considering two models from a local electronics firm.
Machine A has an annual lease cost of $5,000 and a cost per copy of $0.02. Machine B has an annual lease cost of $3500 with a cost per copy of $0.025
Customers would be charged $0.10 per copy.
a. Create a profit model for each Machine – use your models to answer the questions below.
b. Find the break-even quantity for each Machine.
c. If Peter expects to make 200,000 copies per year, what would be the cost for each machine?
d. Create a graph that shows the total annual cost for both machines over a quantity range of 0 to 500,000 units.
(Your graph should look something like the one on pg. 12 except you will have two cost lines instead of a cost line and a revenue line).
e. Use your graph to approximately determine at what volume the two machines have the same annual cost.
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Quantity produced-quantity demanded and quantity sold
: Peter Neutron is the manager of a MailMax store which provides services such as copying, scanning, and faxing in a small university town. Find the break-even quantity for each Machine. If Peter expects to make 200,000 copies per year, what would be t..
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