The Motor Works Is Considering an Expansion Project with Estimated

question 6

Multiple Choice

The Motor Works is considering an expansion project with estimated fixed costs of $127,000, depreciation of $16,900, variable costs per unit of $41.08, and an estimated sales price of $79.90 per unit. How many units must the firm sell to break even on a cash basis?

• A) 2,928 units
• B) 3,272 units
• C) 3,510 units
• D) 4,206 units
• E) 3,842 units

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Definitions:

Prices Double

A situation where the prices of goods or services increase to twice their original amount.

Quasilinear Preferences

Consumer preferences where the utility function is linear in one of the goods, indicating constant marginal utility for that good.

Income Offer Curve

A graphical representation showing how an individual's optimal choice of goods to consume changes as their income changes.

Substitutes

Substitutes are goods or services that can be used in place of each other, where the consumption of one increases, the demand for the other decreases.