18. A spirits manufacturer is considering two potential production investments:Option A costs an initial $2 billion and will involve variable costs (labor and material) of $5 per bottle of spirits. Option B costs an initial $4 billion and will involve variable costs (labor and material) of $3 per bottle of spirits. Assuming an annual capital charge equal to 10 percent of the initial costs, what is the average fixed cost at production level of 20,000,000 bottles per year for the Option B facility? a.$3. b.$20. c.$23. d.$10.
19.Suppose a new manufacturing technology results in an expansion in the supply of golf balls in the United States of 15%. If the elasticity of demand of golf balls sold in the US is -0.4, the new equilibrium price will be
20.“Smitty's Hot Boiled Peanuts" recently reported that its revenue increased from the previous quarter, along with its profits. What is the most likely explanation for this change, if the only change Smitty’s made was in its price?