Pedro Company Has Total Fixed Costs of $480,000

question 38

Multiple Choice

Pedro Company has total fixed costs of $480,000. Total fixed and variable costs are $600,000 at a production level of 125,000 units.
-At Pedro Company the variable cost per unit at 300,000 units is

• A) the same as at 150,000 units.
• B) greater than at 150,000 units.
• C) less than at 150,000 units.
• D) dependent upon fixed costs per unit.

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Definitions:

Price Discrimination

The practice of selling the same product to different buyers at different prices, based on factors other than cost.

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the actual amount they pay.

Producer Surplus

The difference between the amount producers are willing to sell a good for and the actual amount they receive by selling it at the market price.

Direct Price Discrimination

The practice of charging different prices to different consumers for the same product or service, based on the buyer's willingness to pay.