Question
(15) Read the following article on Breakeven Quantity from Harvard Business Review:https://bit.ly/3eXmq2J (also in the Assignment 2 folder in Blackboard) then answer the following questions.
(15) Read the following article on Breakeven Quantity from Harvard Business Review:https://bit.ly/3eXmq2J (also in the Assignment 2 folder in Blackboard) then answer the following questions.
a.(3) Suppose a car company has fixed costs equal to $300 million, variable costs per unit (also known as marginal costs) equal to are $35,000 per vehicle.Calculate their ATC at Q=1,000; Q=5,000; and Q=10,000.
b. (4) On a diagram depict this firms MC and ATC curve for the quantities listed in part a.Be sure that the relevant costs are clearly indicated on the $ axis.
c. (4) Calculate the breakeven quantity at the following prices (costs are the same as described in part a.):
Price is $50,000/vehicle;
Price is $40,000/vehicle;
d.) (4)Suppose the company is considering investing $20 million in a new marketing campaign.They estimate they would sell an additional 5,000 vehicles if the price is $50,000/vehicle, or an additional 6,000 vehicles if the price is $40,000/vehicle.Would this be a profitable investment under either scenario?
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