A firm has two equipment alternatives it can choose from in producing
a new product. One automated piece of equipment cost $200,000 and produces item at a cost of $4 per unit. Another semi automated piece of equipment costs $125000 and produces item at a cost of $ 5.25 per unit.
a) What volume of output makes the two pieces of equipment equally costly.
b) If 80,000 units are to be produced, which piece of equipment is less costly? What is the minimum cost?
(this question is from Applied Mathematics for Business, Economics, and the Social Sciences. 4th Edition)
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