Assume a Fixed Cost for a Process of $10,000

question 7

Multiple Choice

Assume a fixed cost for a process of $10,000.The variable cost to produce each unit of product is $30,and the selling price for the finished product is $50.Ignoring inventory,how many units must the firm sell to break even?

• A)200 units
• B)300 units
• C)400 units
• D)500 units
• E)600 units

---

Definitions:

Functional Finance

Functional finance is a theoretical approach to fiscal policy which holds that government budgets should be primarily evaluated on their effects on the economy rather than on principles of borrowing and debt.

Federal Budget

The annual financial statement presenting the government's proposed revenues and spending for a financial year.

Crowding In

An economic situation where increased government spending leads to an increase in private sector investment.

Crowding Out

A phenomenon where increased government spending leads to a reduction in private sector investment due to higher interest rates.