Use the Following to Answer the Questions Below

question 4

Multiple Choice

Use the following to answer the questions below.
A proposal for implementing a new product line has an annual fixed cost of $60,000, variable cost of $35 per unit of output, and revenue (selling price) of $55 per unit of output.
-Refer to the instruction above. What selling price would be necessary to generate an annual profit of $90,000, if expected volume is 6,000 units per year (assume fixed costs remain at $60,000, and variable cost per unit at $35) ?

• A) $30 / unit
• B) $40 / unit
• C) $50 / unit
• D) $60 / unit

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Definitions:

Production Function

Refers to the relationship between input resources (like labor, land, and capital) and the output produced by these resources.

Marginal Product Of Labor

The additional output a firm gains from employing one more unit of labor, holding all other inputs constant.

Demand For Labor

The total amount of workers that employers want to hire at a given wage rate and time period.

Opportunity Cost

The loss of potential gain from other alternatives when one option is chosen.