Jane, the manager of a company manufacturing air-conditioning units can choose between two production technologies for a new product line. If she chooses and installs technology 1, the yearly costs will be C1(q) = 3600 + 65q + 36q2. If she installs technology 2, they will be C2(q) = 900 + 900q + q2.
a. What are the average total costs of production for each technology? What are the average variable costs of production?
b. Which technology would Jane prefer (purely from a cost standpoint) if the company expected to sell 30 units in summer and 10 units in winter each year?
c. The marginal cost associated with these two technologies are MC1 = 65 + 72q and
MC2 = 900 + 2q respectively. At what level of output, the average cost will be minimized for both technologies?