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3 years ago

Comparing marginal revenue to marginal cost

Business

1 answer:

Mariana [72]3 years ago

5 0

Answer:

(i) reveals the contribution of the last unit of production to total profit

and

(ii) is helpful in making profit-maximizing production decisions.

Explanation:

As MR and MC can tell u what the last output contributed to the profit. change in profit = MR-MC. So we can gain insight on the profit and firm can then according to this make decision on how much to produce i.e. level where MR = MC.

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3 years ago

Suppose France can produce four phones or three computers with one unit of labor, and Sweden can produce one phone or two comput

lesya [120]

Answer:

Option (a) is correct.

Explanation:

France can produce four phones or three computers:

Opportunity cost of producing one phone = (3 ÷ 4)

= 0.75 computers

Opportunity cost of producing one computer = (4 ÷ 3)

= 1.33 phones

Sweden can produce one phone or two computers:

Opportunity cost of producing one phone = (2 ÷ 1)

= 2 computers

Opportunity cost of producing one computer = (1 ÷ 2)

= 0.5 phones

Therefore,

France has a comparative advantage in producing phones because of the lower opportunity cost of producing it than Sweden. France should specialize in producing phones and import computers from Sweden.

Sweden has a comparative advantage in producing computers because of the lower opportunity cost of producing it than France. Sweden should specialize in producing computers and import phones from France.

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3 years ago

Last year, Courtney Company reported sales of $640,000, a contribution margin of $160,000, and an operating loss of ($40,000). B

Elanso [62]

Answer:

Break-even sales = $800,000.

Explanation:

The beak-even point is the units of products to be sold or number of customers to be served to enable a business to cover exactly its total cost from the revenue. At the break-even point, the business makes no profit or no loss because the contribution from sales exactly equals the total fixed cost

Break-even in sales revenue = Total fixed cost/Contribution margin

Contribution margin (%) = Contribution/ sales × 100

= 160,000/640,000

= 0.25 × 100

= 25%

Fixed cost = Contribution - operating income

= 160,000- -( 40,000)

= 160,000 + 40,000

= 200,000

Break-even point sales = 200,000/25%

= $800,000.

3 0

3 years ago