Using the Following Information:
Drill Quest, Inc $Q = 1,200 - 0.05 P$

question 26

Multiple Choice

Using the following information:
Drill Quest, Inc. manufactures drill bits for the oil industry. Drill Quest uses cost-plus pricing to set the price of its bits. Currently Drill Quest applies a 50 percent markup on average total cost. Average variable cost of producing bits is constant and equal to $6,000 per bit. Total fixed cost at Drill Quest is $550,000. DrillQuest currently produces 690 bits. Statistical estimation of demand for Drill Quest brand bits produces the following linear demand equation (where Q is the number of bits demanded and P is the price of bits) :
$Q = 1,200 - 0.05 P$
-Using cost-plus pricing, Drill Quest prices its bits at $______________ per bit.

• A) $10,195
• B) $12,175
• C) $797
• D) $6,000
• E) $6,797

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Definitions:

US Workers

Individuals employed within the United States, encompassing a wide range of occupations and industries.

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Goods or services sent from one country to another for sale or trade, contributing to a nation’s gross domestic product.

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Items and services that are purchased from foreign nations to be sold within the country.

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Refers to goods or services that are created or performed outside the borders of the home country, often considered in the context of imports and exports.