Question

A firm has the capacity to produce 1,000,000 units of a product per year. At present, it is able to produce and sell only 600,000 units yearly at a total income of ₱720,000. Annual fixed costs are ₱250,000 and the variable costs per unit are ₱0.70. Calculate the firm's annual profit or loss for this production.

Name: a firm has the capacity to produce 1000000 units of a product per year at present it is able to produce and sell only 600000 units yearly at a total income of 720000 annual fixed costs are o 44719
Uploaded: 2022-09-29T20:30:18-08:00
Duration: 2 min 4 s
Channel: Andrew Davis
Description: a firm has the capacity to produce 1000000 units of a product per year at present it is able to produce and sell only 600000 units yearly at a total income of 720000 annual fixed costs are o 44719

          A firm has the capacity to produce 1,000,000 units of a product per year. At present, it is able to produce and sell only 600,000 units yearly at a total income of ₱720,000. Annual fixed costs are ₱250,000 and the variable costs per unit are ₱0.70. Calculate the firm's annual profit or loss for this production.

Added by Rachael C.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Andrew Davis

09/29/2022

Step 1

The variable cost per unit is ₱0.70. Since the firm produces and sells 600,000 units, the total variable costs can be calculated by multiplying the variable cost per unit by the number of units sold. Total Variable Costs = 600,000 units × ₱0.70/unit = ₱420,000. Show more…

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A firm has the capacity to produce 1,000,000 units of a product per year. At present, it is able to produce and sell only 600,000 units yearly at a total income of ₱720,000. Annual fixed costs are ₱250,000 and the variable costs per unit are ₱0.70. Calculate the firm's annual profit or loss for this production.