The Michael Scott Paper Company sells 100,000 units at $7 per unit each year to break even. Unit Variable Cost is $4. •Due to competition, Michael is considering a $1 price cut (i.e., $6 instead of $7) and publicize this information with an advertisement which costs $8,000
(1) How many more units sales are required to break even?
(2) Suppose the advertisement will increase the demand (unit sales) by 30%, will the company be able to break even?
(3) If not, what is the lowest price to set?