1. XYZ company’s cost function for the next four months is

Question

1. XYZ company’s cost function for the next four months is
C = 500,000 + 5Q
a) Find the BE dollar volume of sales if the selling price is br. 6 / unit
b) What would be the company’s cost if it decides to shutdown operations for
the next four months
c) If, because of strike, the most the company can produce is br. 100,000 units,
should it shutdown? Why or why not?

oobleck · Answer

(a) solve 500,000+5Q = 6Q (b) set Q=0 (c) check to see whether 6*100,000 > C(100,000)