Melissa Company Produces and Sells a Product That Has Variable

question 4

Multiple Choice

Melissa Company produces and sells a product that has variable costs of $7 per unit and fixed costs of $240,000 per year. is the cost per unit if 20,000 units per year are produced and sold.

• A) $5
• B) $7
• C) $12
• D) $19

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Definitions:

Equilibrium Price

The cost where the supply of goods meets the demand for those goods.

Tax Revenues

The funds collected by governments through the process of levying taxes.

Point Elasticity

The measure of how much the quantity demanded of a good responds to a change in price at a specific point on the demand curve.

Producer Surplus

The difference between the amount a producer is paid for a good and the minimum amount they are willing to accept for producing it.