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The cost of robots on an automotive assembly line represents a fixed operating cost in the long-run cost structure of a manufacturing business, becoming more economical with scale.
The cost of robots used on an automotive assembly line is an example of long-run costs associated with fixed operating costs in manufacturing. When considering the production of off-road vehicles, a designer like Kitt must choose between a labor-intensive plant or one that employs robots extensively.
With a set-up cost of $1 million for the labor-intensive plant compared to $2 million for the robot-intensive one, the initial investment is higher for the latter. However, this is offset by the lower variable costs of $25,000 per vehicle, compared to $30,000 per vehicle in a labor-intensive plant. Therefore, the cost of robots used in the assembly line is considered a fixed cost that becomes more economical as the production scale increases.
The case illustrates how businesses must analyze and decide between technologies with differing fixed and variable costs, and how a higher initial fixed cost can potentially lead to lower average total costs (ATC) when production volumes are high. This reflects the balancing act between choosing a labor or capital-intensive process, influenced by factors such as wages, machine costs, shipping economics, and scale economies.
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The cost of robots used on an automotive assembly line is an example of a cost for resources.
A ready source of assistance, support, or supplies, especially one that is accessible when needed. resources, a nation's overall wealth, or its economic infrastructure. Typically, resources are money or any type of asset that can be sold for cash; assets.
Anything that is useful and enhances your life is a resource. Every element of nature that is useful to humans, such as air, water, food, plants, animals, minerals, and metals, is referred to as a "Resource". Each of these resources has a different value depending on its utility and other elements.
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