Suppose an automobile manufacturer has fixed costs equal to $300 million, and variable costs per unit(aka marginal costs) equal to $45,000 per vehicle. Calculate the breakeven quantities at a price of$65,000/vehicle and at a price $50,000/vehicle. 300,000,000 / (65,000 - 45,000) BEQ = 20,000 300,000,000 / (50,000 - 45,000) BEQ = 60,000 b.)Suppose the firm is considering investing $20 million in a new marketing campaign. If the price is$65,000/vehicle, they estimate they would sell an additional 2,000 vehicles; If the price is $50,000/vehicle theyestimate they would sell an additional 3,000 vehicles. Calculate the company’s profits under both scenarios.
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Suppose an automobile manufacturer has fixed costs equal to $300 million, and variable costs per unit(aka marginal costs) equal to $45,000 per vehicle.
Calculate the breakeven quantities at a price of$65,000/vehicle and at a price $50,000/vehicle.
300,000,000 / (65,000 - 45,000)
BEQ = 20,000
300,000,000 / (50,000 - 45,000)
BEQ = 60,000
b.)Suppose the firm is considering investing $20 million in a new marketing campaign. If the price is$65,000/vehicle, they estimate they would sell an additional 2,000 vehicles; If the price is $50,000/vehicle theyestimate they would sell an additional 3,000 vehicles. Calculate the company’s profits under both scenarios.
c.)Given your calculations above, should this firm invest the $20 million in the marketing campaign? If so,what price should they charge?
so far this is where Im at
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