A company produces and sells luxury goods and is able to control the demand for the product by varying the selling price. The relationship between price and demand is found to be 42 +2D p= 10 – . D2 where p is the price per unit in million dollars and D is the demand per year. The company is seeking to maximize its profit. The fixed cost is $59 million per year and the variable cost is $25 million per unit. The production capacity is 42 units per year, and the company produces at least 1 unit per month. What is the annual breakeven point? What is the company's range of profitable output per year?

A company produces and sells luxury goods and is able to control the demand for the product by varying the selling price. The relationship between price and demand is found to be 42 +2D p= 10 – . D2 where p is the price per unit in million dollars and D is the demand per year. The company is seeking to maximize its profit. The fixed cost is $59 million per year and the variable cost is $25 million per unit. The production capacity is 42 units per year, and the company produces at least 1 unit per month. What is the annual breakeven point? What is the company's range of profitable output per year?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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