A Manufacturer Has Fixed Costs of $100,000, a Variable Cost

question 151

Multiple Choice

A manufacturer has fixed costs of $100,000, a variable cost of $10 per unit of output, and break-even volume of 50,000 units. What should the manufacturer's unit cost be in order to break even?

• A) $10
• B) $12
• C) $14
• D) $16
• E) $20

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Definitions:

Net Change

The difference in a variable's value between two points in time, indicating increase or decrease.

Utility

A measure of satisfaction or benefit that a consumer derives from the consumption of goods and services.

Behavioral Economics Research

Behavioral economics research studies the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical theory.

Anchoring Effect

A mental shortcut in which a person gives excessive weight to the first piece of information they receive (known as the "anchor") during decision-making processes.