Cooling systems Carl is the lead engineer on a smart HVAC cooling system that works with minimal energy and is voice activated. Given the revolutionary nature of the system, it took many failed tries to create a system that actually worked, a cost of
$30,000 . Now each unit sells for $6500 and it costs $5000 in raw materials and labor to produce. What costs should Carl take into consideration when deciding to service the order for an additional unit?
He should only take into account the actual costs for producing another unit, $5000 . not the $30,000 in experimentation costs since those costs are already sunk and should not effect whether or not he produces an additional unit. Even though $30,000 is a large amount, these costs have already been incurred and irreversible at this point.
You might also like to view...
A tax imposed on the buyers of a good will
a. raise both the price buyers pay and the effective price sellers receive. b. raise the price buyers pay and lower the effective price sellers receive. c. lower the price buyers pay and raise the effective price sellers receive. d. lower both the price buyers pay and the effective price sellers receive.
Which of the following legal systems prohibits investment in businesses that deal with alcohol, gambling, and casinos?
A. common B. commercial C. socialist D. Islamic E. civil
When the price of sugar was "low," U.S. consumers spent a total of $3 billion annually on sugar consumption. When the price doubled, consumer expenditures remained at $3 billion annually. This data indicates that:
A. the demand for sugar is inelastic. B. the quantity demanded of sugar increased. C. the demand curve for sugar is upward sloping. D. None of the statements is correct.
Opportunity cost is
A) the combined value of all the alternatives not selected. B) the same thing as the money price of a good. C) the value of the next best alternative which was given up. D) based on the intrinsic value of the good itself.