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A Firm Sells Two Products

question 67

Essay

A firm sells two products.Product R sells for $20;its variable cost is $6.Product S sells for $50;its variable cost is $30.Product R accounts for 60 percent of the firm's sales,while S accounts for 40 percent.The firm's fixed costs are $4 million annually.Calculate the firm's break-even point in dollars.


Definitions:

Herfindahl Index

The Herfindahl Index is a measure of market concentration used to determine the intensity of competition within an industry, calculated by summing the squares of the market shares of all firms within the market.

Import Competition

The pressure on domestic companies from foreign producers offering goods or services in the same market.

Herfindahl Index

A measure of market concentration that squares and then sums the market share percentages of all firms within the industry.

Market Shares

The proportion of a market controlled by a particular company, product, or service in relation to total sales in the market.

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