Answer: Option (d) is correct.
Explanation:
Correct Option: Marginal revenue equals marginal cost.
Pure monopoly is a market situation in which there is a single firm who are producing the goods and these goods are the close substitute. There is no other firm in the market. So, the monopoly firm is the price setter.
The output level that is produced by the profit maximizing monopoly firm is at a point where marginal revenue is equal to the marginal cost. It is the same profit maximizing condition that a competitive firm also utilize to find their equilibrium level of output.
To find the fixed cost, we need add all costs that do not change with the number of haircuts. These are the salaries of the barbers and the manager bonus, the advertisement fees, rent and the magazines. We also have the standard part of the utility payment, the 170$. Those add up to:
6*1310+520+280+980+20+170=9830$. We also have regarding the variable costs:
The utilities variable part are included since they depend on haircuts, barber supplies and the base rate of each barber per haircut. Hence those are:
(5.90+0.38+0.27 per haircut)=6.55$ per haircut
Answer: Demand based pricing
Explanation:
Ray-Ban's plan of gathering information about the other brands sold in department stores, which includes their prices, would most likely be used in a demand based basis for pricing
Demand-based pricing, refers to the method of pricing whereby the fluctuations in the demand of consumers is considered.
Due to the flctuations, the prices are adjusted in a way that fits the changes in the values of the product.
Answer:
Savings in additional cost as result of making $154,350.00
Explanation:
The relevant costs for this decision would be the variable cost of production and the external cost of purchase.
Unit variable cost of internal production
= 10.80 + 9.80 + 4.10 = $24.7
Variable cost of making ( $24.7 × 49,000) = 1,210,300.00
Variable cost of Buying ($27.85 × 49,000) = <u>1,364,650.00</u>
Savings in additional cost as result of making <u> 154,350.00</u>
Note that the fixed cost is irrelevant for the purpose of the make or buy decision . This is so because they would be incurred either way. Hence, they are not to be considered for the analysis
