Response:
There will be an increase in equilibrium quantity, but the impact on equilibrium price remains uncertain.
Note:
Due to the scientists' discovery, demand for oranges will rise, as will the price.
Additionally, the introduction of new fertilizers will boost the supply of oranges, leading to a price decrease.
Taking both of these factors into account indicates that there will be a rise in equilibrium quantity, while the effect on equilibrium price cannot be determined.
Answer:
The financial drawback amounts to 138,600.
Explanation:
The allocated and depreciation costs are inevitable and thus should be regarded as expenses for the purchase option.
Additionally, any income from the extra segment is applicable only to the purchase option.
The avoidable costs include:
Direct Materials
Direct Labor
Variable overhead
Supervisor's salary
These costs are absent in the purchase scenario.