Question: Highgrove Industries must decide which process technology to adopt, given the information below. Cost Technology A Technology B Technology C Price per unit $3 $3
Highgrove Industries must decide which process technology to adopt, given the information below.
| Cost | Technology A | Technology B | Technology C |
| Price per unit | $3 | $3 | $3 |
| Fixed costs per year | $80,000 | $120,000 | $130,000 |
| Variable costs per unit | $2.20 | $1.85 | $1.65 |
Which one of the process technologies would you recommend they adopt if the expected demand is 100,000 units? Explain your result
FORMULAS:
Q* = FC/(VC1 VC2)
Q* = (FC2 FC1)/(VC1 VC2)
FC1 + VC1 = FC2 + VC2
TC = FC + VC(Q)
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