Should I upgrade or keep producing?

Question

I need micro-economic help. I currently produce small parts but I would like to upgrade my production machines (have multiple). By upgrading them to newer ones I can decrease production cost. I need to create an economic graph that tells me "ex: at every 1000 parts produce I would benefit from a newer machine". This way I don't spend a ridiculous amount of money upgrading all my machines only to find out that my production numbers are to low to have justified the cost. I think this is opportunity cost, but not sure.

Answer 1

not opportunity cost, just basic issue of fixed vs. variable costs.

new machine increases your fixed cost (payments on machine or depreciation), but decreases variable costs (# parts * cost per part)

draw the line of decrease in variable costs:

   y = x*(old unit cost - new unit cost))

then draw fixed cost, which will be a horizontal line

  y = annual payment on machine,

then see at which x the two lines cross. that's the output level where machine becomes profitable.

Answer 2

the opportunity cost seems tooo much !!