A Firm Sells Two Products, Regular and Ultra

question 11

Multiple Choice

A firm sells two products, Regular and Ultra. For every unit of Regular the firm sells, two units of Ultra are sold. The firm's total fixed costs are $1,612,000. Selling prices and cost information for both products follow. What is the firm's break-even point in units of Regular and Ultra?

• A) 31,000 Regular units and 31,000 Ultra units.
• B) 31,000 Regular units and 62,000 Ultra units.
• C) 10,333 Regular units and 20,667 Ultra units.
• D) 36,167 Regular units and 72,333 Ultra units.
• E) 62,000 Regular units and 31,000 Ultra units.

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Definitions:

Trade Restrictions

Regulations and policies that governments enact to control the free trade and exchange of goods and services across borders.

Import Quota

A restriction enforced by the government on the volume or price of merchandise that may be imported into a country.

Tariff

A tariff is a tax imposed by a government on imported or exported goods to regulate trade, often to protect domestic industries.

Free Trade

An economic policy that allows imports and exports between countries with minimal governmental restrictions or tariffs.