Smith Manufacturing is a major player in the lawn sprinkler business. Their high-end sprinkler is used commercially, and is quite popular with golf course greens keepers. In producing these sprinklers Smith's fixed cost (CF) is $50,000 per month with a variable cost (c,) of $10 per unit. The selling price for these high-end sprinklers is described by the equation p=$90 – 0.2(D). a) What is the optimal volume of sprinklers? b) Does Smith make a profit at that volume?
Smith Manufacturing is a major player in the lawn sprinkler business. Their high-end sprinkler is used commercially, and is quite popular with golf course greens keepers. In producing these sprinklers Smith's fixed cost (CF) is $50,000 per month with a variable cost (c,) of $10 per unit. The selling price for these high-end sprinklers is described by the equation p=$90 – 0.2(D). a) What is the optimal volume of sprinklers? b) Does Smith make a profit at that volume?
Chapter4: Economic Evaluation In Health Care
Section: Chapter Questions
Problem 7QAP
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