A Producer with Only One Product Has Total Fixed Costs

question 158

Multiple Choice

A producer with only one product has total fixed costs of $15,000 per month. In addition, it cost the producer $100 in variable costs to produce each unit of his product (raw materials and direct labor cost) . The producer charges his wholesalers $125 per unit. How many units of the product does the producer have to sell each month in order to break even?

• A) 450 units
• B) 500 units
• C) 550 units
• D) 600 units
• E) 650 units

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Definitions:

Competitive Price-Searcher Market

A market structure where firms have some degree of market power in setting prices due to product differentiation, but still face competition from other firms.

Losses

The amount by which costs exceed income, resulting in a negative financial outcome for businesses or individuals.

Resource Allocation

The process of distributing available resources among various projects or business units.

Dental Services

Professional care related to the maintenance and treatment of oral health delivered by licensed practitioners.