Discussion
At 40 000 units, which of those two alternatives is cheaper?
Answer: C
Correct answer: B, at 530 000 against A’s 580 000
At 40,000 units,
\[ A: 100\,000 + 12(40\,000) = 580\,000 \]\[ B: 250\,000 + 7(40\,000) = 530\,000 \]so B is cheaper by 50,000. This is above the indifference volume of 30,000, exactly as the previous item predicts, and the saving grows by 5 for every further unit.
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