A company increases the price of its product from $50 to $60, resulting in a price elasticity of demand of -2. If the company's fixed costs are $10,000 and the variable cost per unit is $30, how many units must they sell to break even after the price increase?

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Seekh · Accepted Answer

To find the break‑even quantity, set total revenue equal to total cost. The revenue is the new price times the quantity sold, so $60Q$. The total cost is the fixed cost plus the variable cost per unit times the quantity, $10{,}000 + 30Q$. Setting them equal gives $60Q = 10{,}000 + 30Q$. Solving for $Q$ yields $30Q = 10{,}000$, so \(Q = 333.

A company increases the price of its product from $50 to $60, resulting in a price elasticity of demand of -2. If the company's fixed costs are $10,000 and the variable cost per unit is $30, how many units must they sell to break even after the price increase?

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