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Q. Assume which the ABC Corporation has a production (and sales) capacity of $1,000,000 per month. Its fixed costs---over a considerable range of volume are $350,000 per month, and the variable costs are $0.50 per dollar of sales.
a. Illustrate what is the annual breakeven point volume (D')?
b. Illustrate would be the effect on D' of decreasing the variable cost per unit by 25% if the fixed costs thereby increased by 10%?
c. Illustrate would be the effect on D' if the fixed costs were decreased by 10% and the variable cost per unit were increased by the same percentage.
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Heckscher Ohlin model with two goods (wheat and cloth) and two inputs (land and labor), suppose price of cloth rises by 10% and the price of wheat remains the same. Wheat is land intensive and cloth is labor intensive. the rise in the price of cl..
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illustrate what does this mean for the survival of small firms in the industry.
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