The Marietta Company Has Fixed Costs of $75,000 and Variable

question 81

Multiple Choice

The Marietta Company has fixed costs of $75,000 and variable costs are 75% of the selling price. To realize operating income of $10,000 from sales of 80,000 units, the selling price per unit ________. (Round the answer to the nearest cent.)

• A) must be $1.06
• B) must be $1.42
• C) must be $4.25
• D) must be $3.75

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Definitions:

Equilibrium Price

The market price at which the quantity of a good or service demanded equals the quantity supplied, balancing out buying and selling pressures.

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service versus what they actually receive, reflecting gains from trade.

Consumer Surplus

The gap between the aggregate sum consumers are ready and can afford to pay for a good or service and the aggregate sum they actually spend.

Uses of Markets

The functions markets serve in allowing buyers and sellers to exchange goods, services, and information, facilitating the allocation of resources.