Assume a Company Sells a Given Product for $75 Per

question 83

Multiple Choice

Assume a company sells a given product for $75 per unit.How many units must be sold to break-even if variable selling costs are $12 per unit,variable production costs are $23 per unit,and total fixed costs are $700,000?

• A) 11,112 units.
• B) 13,462 units.
• C) 9,334 units.
• D) 17,500 units.
• E) 6,363 units.

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Definitions:

Work Effort

A term used to quantify the amount of physical or mental exertion put forth by employees or workers in the production of goods or services.

Incentive Compatibility

A concept in mechanism design that ensures the strategies that maximize participants' payoffs also lead to outcomes desired by the mechanism's designer.

Consumers Budget Constraint

A consumer's budget constraint represents the combination of goods and services they can afford with their income and prices.

Adverse Selection

A situation in economic theory where information asymmetry results in high-risk individuals being more likely to apply for insurance or credit, potentially leading to market failure.