Ed makes work desk stations for businesses. His desks sell for $650 each. His total fixed costs are $2,000 and his total variable costs are $250 each for the first 1,000 units he produces, $420 each for the next 1,000 units, $620 each for the next 1,000 units, and $810 units over 3,000. 1. If Ed sells 5,000 desks, what are his total costs? $
2. What is Ed's total revenue? $
3. What is Ed's profit/loss? $

Answer and Explanation:

The computation is shown below:

a) Total Cost

= Fixed Cost + Variable Cost

= 2000 + 250 × 1000 + 420 × 1000 + 620 × 1000 + 810 × 2000

= $29,12,000

b) Total Revenue is

= Price × Quantity

= 650 × 5000

= $3,250,000

c) Profit is

= Total Revenue- Total Cost

= $3,250,000 - $2,912,000

= $338,000

in terms of experimental research, mcdonald’s charging different prices in the two cities relates to

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