Question

Acme Manufacturing is planning to introduce a new product in the EU market next year. They have set a Sales Price of

$
50
$50 per unit. Acme's EU division believes that they can sell 50,000 units p.
a. True
b. False

Answer 1

To calculate the company's profits or losses, consider the total cost and total revenue. If the average cost to produce each unit is lower than the selling price, the company is making profits. Without information about costs, we cannot determine if the marginal unit produced is adding to profits.

Step-by-step explanation:

In order to calculate the company's profits or losses, we need to consider the total cost and total revenue.

Given that the company produces 5 units and sells them for $25 each, the total revenue would be 5 * $25 = $125.

If the average cost to produce each unit is higher than $25, the company would be making losses. If the average cost is lower than $25, the company would be making profits.

However, without information about the costs, we cannot determine if the marginal unit produced is adding to profits.