The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. What would the profit be if she were to produce and sell 5,000 rosebushes?
A)$0
B)$9,000
C)$15,000
D)$10,000
E)$30,000

Question

Quizplus · Accepted Answer

The profit can be calculated by subtracting the total costs from the total revenue. Total revenue from selling 5,000 rosebushes at $6 each is $30,000 (5,000 * $6). The total variable cost for producing 5,000 rosebushes at $3 each is $15,000 (5,000 * $3). The fixed cost, which is the licensing rights, is $6,000. Therefore, the profit is $30,000 (total revenue) - $15,000 (total variable costs) - $6,000 (fixed costs) = $9,000.

The Owner of a Greenhouse and Nursery Is Considering Whether