A Company manufactures and sells one product. The product has the following cost and revenue data: Selling price Per Unit (AED) 71 Variable cost Per Unit (AED) 44 Total fixed expenses per month are as follows: Expenses types AED Advertising Rent Heating 200,000 100,000 100,000 The company produced and sold 10,000 units during the month and had no beginning or ending inventories. a. If the sales increase by 200 units, by how much well the net operating income (profit) increase?

A Company manufactures and sells one product. The product has the following cost and revenue data: Selling price Per Unit (AED) 71 Variable cost Per Unit (AED) 44 Total fixed expenses per month are as follows: Expenses types AED Advertising Rent Heating 200,000 100,000 100,000 The company produced and sold 10,000 units during the month and had no beginning or ending inventories. a. If the sales increase by 200 units, by how much well the net operating income (profit) increase?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. The Metropolis city council is trying to decide whether to let a new business, Lexcorp, cut down a local forest. The city council has asked you to help determine the value the town places on the forest. You conduct a stated preference survey. When asking if people would be willing to pay $70 to preserve the local forest, 15% respond 'yes'. When asking if people would be willing to pay $20, 65% of people respond yes. There are 50,000 people in the city. a. What is the average individual's demand curve for the forest, based on your survey? b. Based on your survey, what's the expected benefit to each individual of having free access to the forest? c. The people of the city currently have free access to the forest. Lexcorp is offering 1,800,000 to cut down the forest. Should the city council accept the offer, given the implied value the whole town places on free access to the forest?
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Kroger, the country's leading grocery-only chain, added a line of private latbel organic and natural foods call Simple Truth to its stores. If you've priced organic foods, you know they are more expensive. For example, a dozen conventionally farmed Grade-A eggs at Kroger costs consumers $1.5, whereas Simple Truth eggs are priced at $3.5 per dozen. One study found that, overall, the average price of organic foods is 85 percent more than that of conventional foods. However, if prices get too high, consumers will not purchase the organic options. One element of sustainability is organic farming, which costs much more than conventional farming, and those higher costs are passed on to consumers. Suppose that a conventional egg farmer's average fixed costs per year for conventionally-farmed eggs are $1 milion per year, but an organic egg farmer's fixed costs are four times that amount. Further assume that the organic farmer's variable costs of $2.7 per dozen are three times as much as…
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