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Specializes in recycling used plastics into consumer goods

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Reference no: EM132519065

Your firm specializes in recycling used plastics into consumer goods.

You have three production opportunities:

  • You can produce plastic utensils for a revenue of $30,000 while production will cost $15,000.
  • Alternatively, you can produce lampshades: you calculate that at the optimal production, you expect to sell 2,000 lampshades every year at $10 each, and your average total cost per lampshade will be $2.
  • You also have the option to shut down your factory and produce nothing at a cost of $1,000 a year.

1. Which opportunity do you choose?

2. What is your accounting profit?

3. What is your economic profit?

Reference no: EM132519065

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