Mohave corp. is considering outsourcing production of the umbrella tote bag included with some of its products. the company has received a bid from a supplier in vietnam to produce 8,800 units per year for $6.50 each. mohave has the following information about the cost of producing tote bags: direct materials $ 3.00 direct labor 1.00 variable manufacturing overhead 1.00 fixed manufacturing overhead 2.00 total cost per unit $ 7.00 mohave has determined that all variable costs could be eliminated by outsourcing the tote bags, while 70 percent of the fixed overhead cost is unavoidable. at this time, mohave has no specific use in mind for the space currently dedicated to producing the tote bags.

required:

1. compute the difference in cost between making and buying the umbrella tote bag.

2. based strictly on the incremental analysis, should mohave buy the tote bags or continue to make them

Which of the following statements regarding the southern economy at the end of the nineteenth century is accurate? the south was producing as much cotton as it had before the civil war.

Providing a great shopping experience to customers is one of the important objectives of purple fashions inc., a clothing store. to achieve this objective, the company has a team of committed customer service professionals whose job is to ensure that customers get exactly what they want. this scenario illustrates that purple fashions is trying to achieve

1. consider a two-firm industry. firm 1 (the incumbent) chooses a level of output qı. firm 2 (the potential entrant) observes qı and then chooses its level of output q2. the demand for the product is p 100 q, where q is the total output sold by the two firms which equals qi +q2. assume that the marginal cost of each firm is zero. a) find the subgame perfect equilibrium levels of qi and q2 keeping in mind that firm 1 chooses qi first and firm 2 observes qi and chooses its q2. find the profits of the two firms-n1 and t2- in the subgame perfect equilibrium. how do these numbers differ from the cournot equilibrium? b) for what level of qi would firm 2 be deterred from entering? would a rational firm 1 have an incentive to choose this level of qi? which entry condition does this market have: blockaded, deterred, or accommodated? now suppose that firm 2 has to incur a fixed cost of entry, f> 0. c) for what values of f will entry be blockaded? d) find out the entry deterring level of q, denoted by q1', a expression for firm l's profit, when entry is deterred, as a function of f. for what values of f would firm 1 use an entry deterring strategy?