Now, there are 2 product offered to sell.

Product X has sales of $50,000 on a volume of 1,000. It needs 10.8 minutes to inspect for each unit. It has $22,057 variable costs and $10,207 fixed costs.

Product Y has sales of $150,000 on a volume of 2,000. It needs 12 minutes to inspect for each unit. It has $56,829 variable costs and $39,065 fixed costs.

Assume that inspection time is scarce.

1. Calculate the total shadow cost of inspection time in $ / hour (round to the dollar).

2. Now, assume the shadow cost is $150/hour. A third product Z is considering to add. The third product Z would sell for $79 per unit. The variable cost to produce it would be $29 per unit and fixed costs would be $21,635. Inspection time for the product would be 14.4 minutes per unit. Calculate the breakeven volume for this new product, taking opportunity cost into account.

3.This situation is an example of which type of product interaction?

a.Supply complement

b.Supply substitution

c.Demand complement

d.Demand substitution