Use the following information to answer Questions 39 - 43
Jim's Production is planning on acquiring a competitive firm with a view to change production technologies.The two firm technologies produce the same output but with different cost functions.Jim's Production technology has a cost function = 1000 + 0.10Q whereas the competitor's cost function = 500 + 0.15Q.
-Which firm has higher fixed costs?
A)Jim's Production
B)Competitor
C)They both have the same fixed costs
D)Need more information

Question

Quizplus · Accepted Answer

The fixed cost is the constant term in the cost function. Jim's Production has a fixed cost of 1000, whereas the competitor has a fixed cost of 500. Therefore, Jim's Production has a higher fixed cost.

Use the Following Information to Answer Questions 39 - 43