Einstein Motors, Has a Capacity to Produce 38,000 Electric Cars

question 113

Multiple Choice

Einstein Motors, has a capacity to produce 38,000 electric cars. Due to a temporary subsidy announced, there is a sudden increase in demand. Einstein decides to adopt peak-load pricing and charge a premium of 30% over its normal selling price of $4000. It has already accepted orders for 29,000 units at normal selling price. What is the total contribution to the company on sale of additional 9000 units if the variable cost per unit is $2000?

• A) $36,000,000
• B) $28,800,000
• C) $18,000,000
• D) $10,800,000

Understand the concepts of average total, average variable, and average fixed costs.

Describe the relationship between marginal cost and marginal product.

Calculate total fixed costs from given average total and average variable costs.

Understand the concept of marginal cost and its relationship with average costs.

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Definitions:

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