1. using cost plus pricing, what is the price if ATC=$23.5 and the target rate o

Question

1. using cost plus pricing, what is the price if ATC=$23.5 and the target rate of return is 17 percent?

a. $28.31

b. $138.24

c. $29.38

d. $46. 74

2. using cost plus pricing, what is the price if ATC=$14.5 and the target rate of return is 4 percent?

a. $15.10

b. $49.34

c. $14.5

d. $22.10

3.using the linear approximation system to estimate the profit maximizing price requires that the managers know the costs of production
a. the production function.
b. one price and quantity of demand.
c. two prices and quantities of demand.
d. decision-making process of the marketplace.

Explanation / Answer

1. Price = ATC + required rate of return*ATC

Price = 23.5 + 0.17*23.5 = 28.3

so a

2. Price = ATC + required rate of return*ATC

Price = 14.5 + 14.5*0.04 = 15.10

   So a

3. c. two prices and quantities of demand.

So that elasticity and slope of demand curve could be estimated

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