Allan Brothers Company has designed a machine for sorting tomatoes. The machine is able to detect bruises on a tomato. Bruised tomatoes are used for making tomato sauce.

The tomatoes without defects are shipped to grocery stores. Managers at Allan Brothers are uncertain of the demand for these sorting machines, but have estimated the following opportunity costs of making different numbers of the machines:

a. Prepare a table showing how the marginal cost of sorting machines varies with the number of machines manufactured.

b. Why does the marginal cost increase after six machines?

c. What is the average cost of making five sorting machines?

d. If the sorting machines can be sold for \($70,000,\) how many machines should be produced?

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Number 1 2 Total Costs $100,000 150,000 3. 190,000 4 220,000 250,000 567 280,000 340,000 8 400,000 9 500,000