Use the Following to Answer the Questions Below

question 73

Multiple Choice

Use the following to answer the questions below.
A proposal for implementing a new product line has an annual fixed cost of $60,000, variable cost of $35 per unit of output, and revenue (selling price) of $55 per unit of output.
-Refer to the instruction above. What is the break-even quantity?

• A) 2,000 units per year
• B) 3,000 units per year
• C) 6,000 units per year
• D) 20,000 units per year

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Definitions:

Marginal Revenue Curve

A graphical representation that shows how the addition of one more unit of a good or service sold affects the total revenue of a business.

Demand Curve

A graphical representation that shows the relationship between the price of a good and the quantity of that good consumers are willing to buy.

Long-Run Equilibrium

A state in economics where all factors of production and economic variables are in balance, and no external pressures are causing change.

Marginal Cost

The additional expenditure required to produce one more unit of a product or service.