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, TC = CF + CV Revenue = Demand x Price, TR = D x PProfit = Total Revenue – Total Cost, P = TR – TC a) Develop the equations for the total cost and total revenue.b) Find the breakeven quantityc) How many units must be sold to maximize profit? d) What is the company’s maximum profit? 10. A small company manufactures a certain product. Variable costs are $20 per unit and fixedcosts are $10,875. The price demand relationship for this product isP = -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, TC = CF + CvRevenue = Demand x Price, TR = D x PProfit = Total Revenue – Total Cost, P = TR – TCa) Develop the equations for the total cost and total revenue.b) Find the breakeven quantityc) How many units must be sold to maximize profit?d) What is the company's maximum profit?

Given: Variable costs=$20 Fixed costs=$10875 P = -0.25D + 250

Answered: A small company manufactures a certain…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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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, TC = CF + CV

Revenue = Demand x Price, TR = D x P

Profit = Total Revenue – Total Cost, P = TR – TC

a) Develop the equations for the total cost and total revenue.

b) Find the breakeven quantity

c) How many units must be sold to maximize profit?

d) What is the company’s maximum profit?

10. 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, TC = CF + Cv
Revenue = Demand x Price, TR = D x P
Profit = Total Revenue – Total Cost, P = TR – TC
a) Develop the equations for the total cost and total revenue.
b) Find the breakeven quantity
c) How many units must be sold to maximize profit?
d) What is the company's maximum profit?

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