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A firm has excess capacity, and has received an order for 50000 units at $20 each over and above its normal production activity of 600000 units. To meet this order, new equipment at a cost of $200000 would have to be bought, and this equipment would have to be scrapped after the order has been filled. The firm currently sells for $50 per unit, has variable costs of $15.80, and fixed costs of $450000.
Question 1: Assuming the firm had been aggressively seeking the business of the customer who requested the special order. Find and Calculate the minimum price the firm would be prepared to charge.
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