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Tetrangle Manufacturing has fixed costs of $2,160 per day. What is the break even level of daily output for the firm?

Tetrangle Manufacturing has fixed costs of $2,160 per day. The firm manufactures bicycle component upgrade kits. The kits have a short-run average variable cost of $48 and are sold for $66 each.

(i) What is the break even level of daily output for the firm?
(ii) What is the degree of operating leverage when daily output is Q = 170?

2. The market supply and demand functions for a product traded on a perfectly competitive market are given below:

QD = 25 - P
QS = -5 + 4P

Calculate the equilibrium price and quantity.

Solution Preview

1. Tetrangle Manufacturing has fixed costs of $2,160 per day. The firm manufactures bicycle component upgrade kits. The kits have a short-run average variable cost of $48 and are sold for $66 each.
(i) What is the breakeven level of daily output for the firm?
breakeven level is the point at which sales equal costs. The point is located by breakeven analysis, which ...

Solution Summary

Step by step computations done for you.

$2.19