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4 years ago

Table: Marginal Analysis of Sweatshirt Production II:

Business

1 answer:

saul85 [17]4 years ago

3 0

Answer:

Optimal qauntity is 4 Units

Explanation:

Here, we have to decide quantity of production at which maximum profit can be generated. For this reason we will have to contruct a table which will help us to calculate Marginal Benefit and Marginal cost. This table is given as under:

Quantity Total benefit Marginal benefit Total Cost Marginal Cost

0 Units 0 0 0 0

1 Units 16 16 9 9

2 Units 32 16 20 11

3 Units 48 16 33 13

4 Units 64 16 48 15

5 Units 80 16 65 17

We can see that at 4 Units, marginal revenue is almost equal to marginal cost. At this level of production, we have maximum benefits generated which is:

Maximum Benefit Generated = ($16 - $9) + ($16 - $11) + ($16 - $13) + ($16 - $15) = $7 + $5 + $3 + $1 = $16 for 4 Units

We can also cross check by considering 5 units case to assess whether the benefit generated is more than 4 units case or not.

Maximum Benefit Generated (For 5 Units) = ($16 - $9) + ($16 - $11) + ($16 - $13) + ($16 - $15) + ($16 - $17) = $7 + $5 + $3 + $1 - $1 = $15 for 4 Units

As the maximum benefit generated in the case of 4 units is more because of using marginal revenue = Marginal Cost relation, hence the optimal quantity is 4 units.

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gogolik [260]

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scZoUnD [109]

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3 years ago

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Hexon Printing Company projected the following information for next year: Selling price per unit $80 Contribution margin per uni

Nonamiya [84]

Answer:

Break-even point in units= 5,500

Explanation:

Giving the following information:

Selling price per unit $80

Contribution margin per unit $40

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pishuonlain [190]

Answer:

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