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Lelu Runs a Firm That Sells Multipasses to Intergalactic Cruises

question 97

Essay

Lelu runs a firm that sells multipasses to intergalactic cruises.Her short-run cost function is given by
C(q)= q2 + 25q + 144
a.If the market price is $75/pass,how many units will Lelu produce?
b.At what price will Lelu earn zero profits?
c.If the price is below the level you found in b. ,will Lelu shut down? If so,explain.If not,below what price will she shut down?


Definitions:

Process Costing

A costing method used in manufacturing where costs are assigned to a product based on the process it goes through in the production cycle.

Variable Cost

Costs that vary directly with the level of production or service, such as materials and labor used in production.

Fixed Costs

Expenses that do not change with the level of goods or services produced over the short term, such as rent, salaries, and insurance.

Product Costing

The process of determining the total cost associated with producing a product, including direct materials, direct labor, and overhead.

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