What is the most profitable level of output per week for the new product

ABC plc is about to launch a new product. Facilities will allow the company to produce up to 20 units per week. The marketing department has estimated that at a price of £8,000 no units will be sold, but for each £150 reduction in price one additional unit per week will be sold.

 

Fixed costs associated with manufacture are expected to be £12,000 per week. Variable costs are expected to be £4,000 per unit for each of the first 10 units; thereafter each unit will cost £400 more than the preceding one. The most profitable level of output per week for the new product is

(A) 10 units

(B) 11 units

(C) 13 units

(D) 14 units

(E) 20 units

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