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Demand for concave utility meters is expanding rapidly, but the industry is highly competitive. A utility meter plant costs $55 million to set up, and
Demand for concave utility meters is expanding rapidly, but the industry is highly competitive. A utility meter plant costs $55 million to set up, and it has an annual capacity of 605,000 meters. The production cost is $10 per meter, and this cost is not expected to change. The machines have an indefinite physical life and the cost of capital is 11%. What is the competitive price of a utility meter? Ignore taxes.
This is a multiple choice question
A) $10
B) $15
C) $20
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