ABC company is planning to double their production capacity in 2023. The construction cost of a similar plan in 2000 was $1.7 mil. The company has concluded that there is a significant Economy of scale opportunity with an exponent of 0.35. The construction cost index was 125 in the year 2000 and it is 250 in 2023. What is your best estimate of the cost of this expansion?

ABC company is planning to double their production capacity in 2023. The construction cost of a similar plan in 2000 was $1.7 mil. The company has concluded that there is a significant Economy of scale opportunity with an exponent of 0.35. The construction cost index was 125 in the year 2000 and it is 250 in 2023. What is your best estimate of the cost of this expansion?

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter4: Economic Evaluation In Health Care

Section: Chapter Questions

Problem 7QAP

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