A firm that produces widgets must pay a fixed cost of $150.It costs an additional $30 for every widget that they produce.If the market price is $40,how many widgets does the firm have to sell so that it does not incur a loss?
A)1
B)5
C)10
D)15

Question

Quizplus · Accepted Answer

To break even and not incur a loss, the firm's total revenue must equal its total costs. The total cost (TC) is the sum of fixed costs (FC) and variable costs (VC), where VC is $30 per widget. The total revenue (TR) is the market price per widget ($40) times the number of widgets sold (x). The break-even point is where TR = TC. Thus, $40x = $150 + $30x. Solving for x gives x = 15.

A Firm That Produces Widgets Must Pay a Fixed Cost