If Fixed Costs Are $450,000, the Unit Selling Price Is

question 40

Multiple Choice

If fixed costs are $450,000, the unit selling price is $75, and the unit variable costs are $50, what are the old and new break-even sales in units (rounded to a whole number) if the unit selling price increases by $10?

• A) 6,000 units and 5,294 units
• B) 18,000 units and 6,000 units
• C) 18,000 units and 12,857 units
• D) 9,000 units and 15,000 units

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Definitions:

Surplus

The situation where the quantity supplied of a product exceeds the quantity demanded at a given price.

Negative Externality

An economic situation where a third party is negatively affected by the actions of others, typically not reflected in the cost of those actions, such as pollution.

Common-Resource Problem

A dilemma in the management of resources that are available to all but are susceptible to overuse and depletion because they are not excludable.

Nontoll Roads

Public roads that can be used without paying a fee, financed by taxes rather than direct user charges.