Question

If a product costs $10 to produce, the firm expects 10% margin on the cost to produce, and transportation per unit costs $2, what is the least price the firm is likely to accept for the product?

a) $9
b) $11
c) $12
d) $14

Answer 1

The least price the firm is likely to accept for the product is $13.

Step-by-step explanation:

The firm expects a 10% margin on the cost to produce and incurs a transportation cost of $2 per unit. To determine the least price the firm is likely to accept, we need to calculate the total cost per unit by adding the production cost, margin, and transportation cost.

Production cost + Margin + Transportation cost = $10 + 10% of $10 + $2 = $10 + $1 + $2 = $13

Therefore, the least price the firm is likely to accept for the product is $13, which is not one of the given options. It seems the options provided in the question are not accurate, but the correct answer would be a price higher than $13.