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You sell 2 products. Product one has sales of $50,000 on volume of 1,000. Each unit needs 9.4 minutes to inspect. Costs are $21452 variable
You sell 2 products. Product one has sales of $50,000 on volume of 1,000. Each unit needs 9.4 minutes to inspect. Costs are $21452 variable and $10020 fixed. Product 2 has sales of $150,000 on volume of 2,000. Each unit needs 13.4 minutes to inspect. Costs are $59820 variable and $41473 fixed. Assume that inspection time is scarce. Calculate the total shadow cost of inspection time in $ / hour (round to the dollar). Answer: Notwithstanding your answer to the last question, assume the shadow cost is $150/hour. You are considering adding a third product. The third product would sell for $72 per unit. Variable cost to produce it would be $21 per unit and fixed costs would be $18591. Inspection time for the product would be 15.6 minutes per unit. Calculate the breakeven volume for this new product, taking opportunity cost into account. Answer: This situation is an example of which type of product interaction? a. Supply substitution O b. Demand substitution O c. Demand complement O d. Supply complement
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