Assume a Fixed Cost for a Process of $120,000

question 17

Multiple Choice

Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break even?

• A) 5,000 units
• B) 6,000 units
• C) 8,000 units
• D) 11,000 units
• E) 12,000 units

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Definitions:

Expected Marginal Cost

The anticipated cost of producing one additional unit of a good or service, taking into account all relevant factors and future circumstances.

Expected Marginal Benefit

is the anticipated additional benefit or utility obtained from consuming one more unit of a good or service.

Rational Decision Maker

An individual or entity that makes decisions by systematically considering the available information, alternatives, and potential outcomes.

Economic Theory

A set of principles and methodologies that economists use to understand, explain, and make predictions about economic processes and behaviors.