Q 12.30. A firm can produce goods for an average per- unit cost of $5+$10/(Q-$1+2). For example,
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Q 12.30. A firm can produce goods for an average per- unit cost of $5+$10/(Q-$1+2). For example, to pro- duce 10 goods would cost 10-($5+$10/12) ~ $58.33. The market price per good is $7-Q-$1/10. So, you can fetch 10-($7-$10/10) = $60 for selling 10 goods. Use a spreadsheet to answer the following questions. 1. What is the break-even point where total gross revenues are equal to total cost? 2. What is the gross profit (revenues minus costs) at the break-even point? 3. What is the marginal gross profit at the break- even point? 4. How many items should the firm produce? 5. What is the average per-unit gross profit at this point? 6. What is the marginal gross profit at this point?
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