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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
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 of 250,000 and the variable costs per unit are of 0.70.
Question: If the firm can increase its sales to 80% of full capacity, what will its profit or loss be, assuming that its income and variable costs per unit remain constant?
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