Jaybird Company Operates in a Highly Competitive Market Where the Market

question 76

Multiple Choice

Jaybird Company operates in a highly competitive market where the market price for its product is $50 per unit. Jaybird desires a $15 profit per unit. Jaybird expects to sell 5,000 units. Additional information is as follows: To achieve the target cost per unit, Jaybird must reduce total expenses by how much?

• A) $14,500
• B) $3,500
• C) $23,000
• D) $20,000
• E) $13,000

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Definitions:

Policymaker

An individual or group responsible for making decisions and policies that affect a country's economy, society, or institution.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved due to market inefficiencies or interventions.

Tax Per Unit

A tax that is levied on a product based on the amount of the product sold, not on its value.

Consumer Surplus

The incongruity between what consumers are willing to expend on a good or service and what they truly expend.