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A producer can produce a product at a variable cost per unit of $6. If the fixed cost is $50,000, and demand for the product is forecast to be 15.000 units.
a. What price must the producer charge to producer sell to break-even? Show your work.
b. If the producer wants to obtain a sales revenue of $120,000, what price should it charge? Show your work.
c. Given your answer for price in part b., how much must fixed cost be cut so that the producer can make a profit of $30,000? Show your work.
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