a) The current cost function for a lab that evaluates Pap smears isC = 200,000 + 25 x Q. Q, the annual volume of tests, is forecast tobe 30,000. The incremental cost is $25 becuase each evaluation requires $20 worth of a technician's time and $5 worth of supplies.Calculate the average cost of an evaluation.
b) You are comparing replacement of the current lab, which has a cost function of C = 200,000 + 25 × Q, with an automated lab that has a cost function of C = 300,000 +20 × Q. Doing so would reduce the error rate from 1.5 percent to 1percent. Your volume is expected to be 18,000 tests per year.Should you choose the automated lab? Briefly explain your logic.