For a good that is a luxury, demand a. tends to be inelastic. b. tends to be elastic. c. has unit elasticity. d. cannot be repre
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The number of bottles the facility requires to sell when it breaks is given by
a system of two simultaneous equations.
- When the facility breaks even, it would have sold 7<u>7,579 bottles of apples juice</u>.
Reasons:
The cost to make a jar of applesauce or a bottle of apple juice = $0.68
Number of jars of applesauce to be sold foe every 2 bottles of apple juice = 3 jars
The selling price for a jar of applesauce = $2.20
Selling price for a bottle of apple juice = $3.15
Annual overhead cost excluding production cost = $368,500
Required: Number of bottles of apple juice sold by the facility when it breaks even annually.
Solution:
Let <em>J</em> represent the number of bottles of apple juice sold, and let <em>S</em> represent the number of jars of apple sauce, by excluding the production cost, we have;
(3.15 - 0.68)·J + (2.2 - 0.68)·S = 368,500
S : J = 3 : 2
Which gives;
Therefore;
Which gives;
The number of bottles of apple juice sold, J ≈ <u>77,579 bottles</u>
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