In Order to Produce a New Product, a Firm Must

Multiple Choice

In order to produce a new product, a firm must lease equipment at a cost of $10,000 per year. The managers feel that they can sell 5,000 units per year at a price of $7.50. What is the highest variable cost that will allow the firm to at least break even on this project?

A) $2.50.
B) $3.50.
C) $4.50.
D) $5.50.
E) $6.50.