--%>

Problem on price mark up

A company consists $27 per unit in variable costs and $1,000,000 annually in fixed costs. Demand is predicted to be 100,000 units annually. Determine the price if a markup of 40% on total cost is used to determine the price?

E

Expert

Verified

Total variable cost 1, 00,000 * 27 = $27, 00,000
+ Fixed Cost  = $10, 00,000

Thus total cost is $37, 00,000 i.e. $37 per unit.

Thus price is 37 + 40% i.e. $51.80.

   Related Questions in Microeconomics

  • Q : Marginal costs for producing and selling

    Monsieur Cournot has a monopoly on an artesian well from that flows tasty spring water along with medicinal properties. To ignore variable costs, he insists which customers bring their own pails as well as fill them individually. Cour

  • Q : Expected rate of return on R&D

    All of the following rise the expected rate of return on R&D expenditures, except: A) patents. B) trademarks. C) imitation by others. D) trade secrets

  • Q : Accounting profits when economic profit

    Whenever economic profit equivalents zero, then the accounting profits: (i) Are explicit costs of the remaining in business. (ii) Will induce raised investment even when accounting costs are much low. (iii) Are too zero. (iv) Reflect normal returns on the investment t

  • Q : Consumer goods-Durable and nondurable I

    I have a problem in economics on Consumer goods-Durable and nondurable. Please help me in the following question. Consumer goods comprise durable and nondurable goods, and: (i) Capital equipment. (ii) House-hold goods. (iii) Services. (iv) Electronic goods.

  • Q : Derived Demand Can someone help me in

    Can someone help me in finding out the right answer from the given options. Demands for the productive resources are eventually ‘derived’ from the: (i) marginal utility they directly produce. (ii) Demands for the consumer services and goods. (iii) Disutili

  • Q : Expectations in market demands for

    Present market demands for most of the durable goods tend to rise if: (1) Their prices are predicted to rise in the near future. (2) Consumers expect growth in supplies of substitutes. (3) Technological advances make present models obsolete. (4) The p

  • Q : Define money Money : Money is what

    Money: Money is what money does. Or Money is something that is accepted as a medium of exchange and at similar time act as a store of value.

  • Q : Problem on decline in demand function

    In the month of January, Disney World in Florida cut its ticket prices into half and starts letting all kids beneath age five without charge. The economic forecaster might reasonably expect: (1) A decline in demand for the tickets to Disney Land in California. (2) A r

  • Q : Average production cost by maximum

    When Nostalgia Corporation maximizes profit in its production of Silver Screen DVDs, in that case its average production cost per DVD will be roughly: (i) $3 per copy. (ii) $5 per copy. (iii) $7 per copy. (iv) $9 per copy. (v) $11 per copy.

  • Q : Good taxed revenue of price inelastic

    Government tax revenue would raise most from a specified tax when the good taxed contain a relatively: (w) price elastic demand. (x) price inelastic demand. (y) unitary price elastic demand. (z) flatter demand curve.

    Discover Q & A

    Leading Solution Library
    Avail More Than 1429488 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads
    No hassle, Instant Access
    Start Discovering

    18,76,764

    1945113
    Asked

    3,689

    Active Tutors

    1429488

    Questions
    Answered

    Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

    Submit Assignment

    ©TutorsGlobe All rights reserved 2022-2023.