Question

A firm fixed cost is 5000 birr and the variable cost per unit of output is 5 birr selling price per unit is 10 birr write rerenve and cost equation

Answer 1

revenue = 10u where u = units

cost = 5000 + 5u

Explanation:

each unit costs 5u + fixed cost 5000

revenue is 10 x number of units

If you want to find the breakeven # units, set the two equal to eachother:

5000 + 5u = 10u

5000 = 5u

u = 1000 (must sell 1000 units to break even)