Break-Even Analysis OHaganBooks.com has recently decided to start selling music albums online through a service it calls o’Tunes.75 Users pay a fee to download an entire music album. Composer royalties and copyright fees cost an average of $5.50 per album, and the cost of operating and maintaining o’Tunes amounts to $500 per week. The company is currently charging customers $9.50 per album.
a. What are the associated (weekly) cost, revenue, and profit functions?
b. How many albums must be sold per week in order to make a profit?
c. If the charge is lowered to $8.00 per album, how many albums must be sold per week in order to make a profit?
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