Question
7.Elon Musk had two options for setting up the first major Tesla factory.He could either automate it heavily, with variable costs of $10,000 per Tesla
7.Elon Musk had two options for setting up the first major Tesla factory.He could either automate it heavily, with variable costs of $10,000 per Tesla and $10 billion in capital (assume it will last forever and he can sell it next year for $10 billion as well), or rely on more labor and have variable costs of $19,000 per Tesla with $1 billion in capital (assume it will last forever and he can sell it next year for $1 billion as well).If his best outside opportunity returns 10% and/or he can borrow at 10%,what is the average total cost of producing 100,000 cars a year using each method?
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