The manager of a company manufacturing air-conditioning un

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Jane, the manager of a company manufacturing air-conditioning units can choose between two production technologies for a new product line. If she chooses and installs technology 1, the yearly costs will be C₁(q) = 3600 + 65q + 36q². If she installs technology 2, they will be C₂(q) = 900 + 900q + q².

a.         What are the average total costs of production for each technology? What are the average variable costs of production?

b.         Which technology would Jane prefer (purely from a cost standpoint) if the company expected to sell 30 units in summer and 10 units in winter each year?
c.         The marginal cost associated with these two technologies are MC1 = 65 + 72q and
MC2 = 900 + 2q respectively. At what level of output, the average cost will be minimized for both technologies?

Reference no: EM13749205

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