(a) Give the equation for total revenue for z units per Problem 10 year (b) Give

Question

(a) Give the equation for total revenue for z units per Problem 10 year (b) Give the equation for total costs for x units per year (c) What is the "breakeven" level of x? (d) If you sell 1500 units this year, will you have a profit or loss? How much? (e) At 1500units, what are your marginal and average Consider the accompanying breakeven graph for an investment, and answer the following questions. costs? $40 r $35 $30 $25 $20 $15 10 s5 So Total Revenue Total Cost 0 250 500 750 1000 1250 1500 1750 Output (units/year)

Explanation / Answer

PART-A) Total Revenue = ($200,000 / 1,000) * x = $200 x

PART-B) Total Cost = $100,000 + [($100,000/1,000) * x] = $100,000 + $100 x

PART-C) Setting Total Cost = Total Revenue, we get :

$200 x = $100,000 + $100 x

or, x = 1,000 units per year

PART-D)

Total Revenue ($200 * 1,500)

$300,000

Total cost ($100,000 + $100 *150)

$250,000

Profit

$50,000

Total Revenue ($200 * 1,500)

$300,000

Total cost ($100,000 + $100 *150)

$250,000

Profit

$50,000

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