--%>

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 factor-Costs problem I have a

    I have a problem in economics on Marginal factor Costs. Please help me in the given question. The synonymous words marginal factor costs or marginal resource costs signify to the: (p) Cost incurred in generating an additional unit of the capital. (q) Cost to the resou

  • Q : Pure monopoly firm operates in purely

    In spite of of whether a firm is a pure monopoly or operates within a purely competitive industry as: (i) this should expect total revenue to cover total variable costs or this will not operate. (ii) the demand curve this faces will be horizontal in t

  • Q : Ratios of personal benefits in Welfare

    Welfare is explained as being received while: (w) the ratios of personal benefits received by government programs associate to taxes paid are greater than for the average citizen. (x) economic rents are earned by owners of inputs. (y) a productive inp

  • Q : Price ceiling set below equilibrium A

    A price ceiling set below equilibrium will raise the: (w) quantity supplied. (x) good’s opportunity cost to buyers. (y) sellers’ profits. (z) rate of excess supply. How can I solve my economics

  • Q : Complementary goods problem When a

    When a price cut for licorice gummy bears decreases the demand for tuna fish ice cream, then: (i) tuna fish ice cream and licorice gummy bears are both complementary goods. (ii) Price scrambles for tuna fish ice cream will diminish the demand for licorice gummy bears.

  • Q : Change in total revenue by selling

    Marginal revenue, which is: (w) the change in total revenue from selling an additional unit of output. (x) the change in total revenue from hiring an additional unit of labor. (y) computed as TR/Q. (z) specified by change in Q / change in TR.

  • Q : Marginal Revenue and Total Revenue If a

    If a monopolist which does not price discriminate has maximum total revenue as: (1) demand is perfectly price elastic. (2) marginal revenue is positive. (3) demand is relatively inelastic  (4) marginal revenue is

  • Q : Long-run economic losses in a

    Expectations of long-run economic losses within a competitive industry as: (1) inevitably follow “cut throat” pricing policies. (2) cause firms to leave the industry. (3) increase each firm’s long-run fixed costs. (4) create pressure

  • Q : Profit-maximizing output for economic

    Babble-On maintains world-wide patents for software which translates any of 314 spoken languages in text, along with automatic audio and text translations within any of the other three-hundred-thirteen languages. When Babble-On produces its profit-maximizing o

  • Q : Good illustration of oligopoly The

    The tobacco industry within the United States is a good illustration of: (1) monopoly. (2) pure competition. (3) oligopoly. (4) corporate responsibility. (5) duopoly. I need a good answer on the topic of Economics