You have seen how managers can decide whether to make or buy the containers they need. Let’s modify the example by supposing that the more carafes the company produces, the more the workers learn how to operate the machine efficiently. If the company buys the blow-molding machine, say that these learning-by-doing economies

(see Section 4.3) lower the cost of producing a carafe by 1¢ to $0.29 in the second year and by another 1¢ to $0.28 in the third year. As the machine ages, the cost of servicing it increases, so that in the fourth and fifth years the cost of a carafe remains $0.28 per carafe but then rises to $0.29 in the sixth year and to $0.30 in the seventh year. The company produces the same number of carafes in each of the seven years. With these changes, should the managers buy the machine? Why or why not?