A retired auto mechanic hopes to open a rustproofing shop. Customers would be local new-car dealers. Two locations are being considered, one in the center of the city and one on the outskirts. The central city location would involve fixed monthly costs of $6,950 and labor, materials, and transportation costs of $30 per car. The outside location would have fixed monthly costs of $4,350 and labor, materials, and transportation costs of $38 per car. Dealer price at either location will be $98 per car.
a. Which location will yield the greatest profit if monthly demand is (1) 330 cars? (2) 430 cars? 330 cars: yields the greatest profit. 430 cars: yields the greatest profit.
b. At what volume of output will the two sites yield the same monthly profit?