25. A small family-run engineering company has a production capacity of 9000
units per year. Market research suggests that the market will take up all of
this output at a price of Rs. 400. The firm’s cost structure is as follows:
a. Direct labour Rs. 75 per unit.
b. Raw materials Rs. 25 per unit.
c. Other variable costs Rs. 50 per unit.
d. Total fixed cost are Rs. 1350000 a year.
Calculate AFC, AVC, ATC, TR and profits, if the factors produced its
capacity output.
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The cost structure of the company is as follows are:
- A small family-owned engineering company has the capacity to produce 9000 units per year.
- Market research suggests that the market will take all of this output at a cost of $ 8 per unit.
- Work costs $ 1.5 / unit.
- Unripe items cost $ 0.50 / unit other alternatives cost $ 1 / unit.
- The total fixed cost is $ 27,000 per year.
- Suppose a consumer’s taste shifts away from the product and the firm has to lower the price to $ 6 / unit to remove the unsold.
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