Suppose that you have two processes A and $B$ for producing a widget. Process A has a fixed cost of $$10,000$ and per unit variable cost of $$8$ $$40\mathrm{.}00.$ The widget sells for $$100$ regardless of production Process used. During the next three years $($your planning horizon for the widgets$)$ least $700$ units per year. You will:

Multiple Choice

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choose Process B$,$ since it has low variable cost.

be indifferent between choosing Process A and $B,$ because they both have the same break$-$even point.

choose Process A$,$ since it has a low fixed cost.

choose Process $B,$ since it will have higher net profit than Process $A$ in the next three years.

choose either Process A or B $,$ since both will result in same profit for the next three years.

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