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28 May, 17:17

Pastry Paradise is looking to expand. It decides to take over Sweet Tooth, a competitive firm. The two firms have similar technology but different costs. Pastry Paradise has $1500 fixed costs and $1 marginal cost per unit produced. Sweet Tooth has $500 fixed costs but $5 marginal cost per unit produced. What is the total cost, at the level of production where Pastry Paradise is indifferent between which technology is used?

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  1. 28 May, 17:33
    0
    17500 would be the cost
  2. 28 May, 17:41
    0
    The total cost is $1750.

    The level of production is 250 units.
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