retired mechanic
August 8th, 2022
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A retired auto mechanic hopes to open a rustproofing shop. Customers would be local new-car dealers. Two locations are being considered, one in the center of the city and one on the outskirts. The central city location would involve fixed monthly costs of $6,890 and labor, materials, and transportation costs of $30 per car. The outside location would have fixed monthly costs of $4,300 and labor, materials, and transportation costs of $40 per car. Dealer price at either location will be $90 per car. |
| a. |
Which location will yield the greatest profit if monthly demand is (1) 200 cars? (2) 300 cars? |
| 200 cars: yields the greatest profit. |
| 300 cars: yields the greatest profit. |
| b. |
At what volume of output will the two sites yield the same monthly profit? |
| Volume of output | [removed] cars |
