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Cook Corporation manufactures plastic garbage cans. In a typical year, the firm produces between 40,000 and 50,000 cans. At this level of production, fixed costs
Cook Corporation manufactures plastic garbage cans. In a typical year, the firm produces between 40,000 and 50,000 cans. At this level of production, fixed costs are $10,000 and variable costs are $2 per can.
1. Graph the cost of producing cans, with cost as the vertical axis and production output as the horizontal axis.
2. Indicate on the graph the relevant range of the $10,000 in fixed costs, and explain the significance of the relevant range.
3. What would total production costs be if 46,000 cans were produced?
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