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Business, 07.06.2020 00:01 thicklooney

You are given the following total cost information for four pharmaceutical facilities producing generic drugs. Costs are in thousands of dollars. Units produced are thousands of units per year. Each unit may consiste of a large number of pills, which are sold to the wholesale market. The value of buildings, land and equipment is in millions of dollars. Facility# 0 250 500 750 1000 Number of units produced ('000s) 10 20 30 40 2450 2950 4210 6250 1500 2100 2600 3600 2250 3450 5050 8250 2400 3600 4600 7000 2 50 9250 5100 13250 11000 60 14250 7100 20250 17000 Facility# Value of buildings, land, and equipment ($ 000,000) Facility# Opportunity cost of capital (annual ) 10 For each facility: Ignoring the opportunity cost of the building, land, and equipment, calculate: (1) The minimum average variable cost. (2) Assuming that a facility that minimized their average variable costs, the gain or loss if prices were 596 higher than your answer to (1). That is, price = your answer to (1) x 1.05. Including the opportunity cost of the building, land, and equipment, calculate: (3) The price that would ensure that economic profits are not negative. You will have a total of 12 answers, 3 for each of the four factories.

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