1. A small company manufactures a certain product. Variable costs are $20 per unit and fixed costs are $10,875. The price-demand relationship for this product is P= -0.25D + 250, where P is the unit sales price of the product and D is the annual demand. • Total cost = Fixed cost + Variable cost • Revenue = Demand * Price • Profit = Revenue – Total cost 1.1. Develop the equations for total cost and total revenue. 1.2. Find the breakeven quantity.

1. A small company manufactures a certain product. Variable costs are $20 per unit and fixed costs are $10,875. The price-demand relationship for this product is P= -0.25D + 250, where P is the unit sales price of the product and D is the annual demand. • Total cost = Fixed cost + Variable cost • Revenue = Demand * Price • Profit = Revenue – Total cost 1.1. Develop the equations for total cost and total revenue. 1.2. Find the breakeven quantity.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter7: Economies Of Scale And Scope

Section: Chapter Questions

Problem 5MC

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