economics with maths

Question

An electrical component manufacturer has the following:
 
 
 Price (£) received for each component sold:5
 
Fixed costs (£):20,000
 
Constant marginal cost (£):2
 
 
 
 
 
 
 What is the break even level of production (Quantity)?

 

 

Answer 1

Total revenue: TR=5Q

Total cost: TC = 20,000 +2Q

 

Break even when TR=TC ⇒ 5Q = 20,000+2Q ⇒ Q =20,000/3=6,667

TR=5(6,667)=£ 33,333.