Business, 11.12.2019 02:31 rachelkorkees

Assume a european company that manufactures decorative fountain pens. the firm is trying to decide whether or not to expand its facilities. currently, its fixed costs are $750,000 per month, and its average variable costs are $1.25 per pen. if the firm expands, its fixed costs will increase by $350,000 per month but its average variable costs will fall to $0.75 per pen.

a. write out the formula for the firm’s current (short run) total cost tc(q), and its (short run) total cost tc(q) if it expands, with q measures the number of pens per month.

b. suppose the firm has a monthly volume of 600,000 pens. should it expand? what about if the firm expects its volume to increase to 800,000 pens a month?

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Assume a european company that manufactures decorative fountain pens. the firm is trying to decide w...

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