Assume that ACME tires sells their high performance tires for $220 each and thei

Question

Assume that ACME tires sells their high performance tires for $220 each and their all weather tires for $140 each. Further assume that the cost of producing a high performance tire is $185 and the cost of producing an all weather tire is $125. Finally, assume tht if a tire does not last 40,000 miles, ACME tires will replace it free of charge to the consumer; ACME will incur the cost of replacement, but will not receive any additional revenue.
- What is the profit eaned/loss incured on high performance tire that exceeds 40,000 miles?

Explanation / Answer

maybe im missing the question, but it seems to me that its just asking what ACME makes for every high performance tire that lasts beyond 40,000 miles. In other words, $220 - $185 (cost of production) = $35. Is there more to the question? From whats written, thats what it seems like to me. Hope that helps Jonathan

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