Production Data for the Number of Hours Required Per Unit

question 3

Multiple Choice

Production data for the number of hours required per unit for making the Droid and iPhone versions of cell phone components by Bizzer, a high-tech manufacturing firm, is given below. Suppose the plant decides to make the maximum number of iPhone components possible and reach the rest of its capacity by making Droid phones. How many of each type of phone will it make? Monthly Product

• A) 375 iPhone units and 625 Droid units
• B) 500 iPhone units and 500 Droid units
• C) 1000 iPhone units and 1000 Droid units
• D) 625 iPhone units and 375 Droid units

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Definitions:

Output

The total quantity of goods and services produced by an economy or a firm.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the quantity of output produced, a measure of per unit cost.

Marginal Cost

The cost of producing one additional unit of a good or service, which can vary depending on the level of production.

Average Variable Cost

The total variable cost divided by the quantity of output, representing the variable cost per unit of output.