An auto manufacturer is considering adding new automation to their assembly line to reduce production costs. The manufacturer is
2 answers:
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The new ordinance will make a difference when the new wages will be binding.
<h3>How to depict the information?</h3>It should be noted that the supply curve shows the relationship between the price and the quantity supplied.
Based on the information given, when the equilibrium wage is above the minimum wage, the ordinance won't make a difference.
On the other hand, when the equilibrium wage is below the minimum wage, it'll make a difference for the worker.
Therefore, joining the lowest of the two points will give the equilibrium.
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Answer:
B. Company A's cost structure has higher fixed costs than B's.
Explanation:
Let's see the formula for income:
50,000 units x sales price - variable cost x 50,000 - fixed = net income
50,000 (sales - variable) - fixed = net income
At 50,000 both have equal net income.
Also we are given the fact that their sales is the same.
"identical except for cost structure"
So:
We work it and remove sales from the equation:
At 60,000 units, Company A has a higer income, so the increase of variable cost in company A is lower than company B
The cost of 10,000 more units is all variable cost, if Company A has more income, then their variable are lower.
If variable cost for 10,000 is lower, same applies for the variable cost for 50,000 so we have:
10,000Va < 10,000 Vb
50,000Va < 50,000Vb
So to have equal income at 50,000 units.
Fixed of A > Fixed of B