Answer :
The profit of Molar Express, when the company chooses the profit-maximizing price, will be $20,000.
To find the profit-maximizing price, we need to calculate the contribution margin per unit, which is the selling price per unit minus the variable cost per unit. Here, the variable cost per unit is $20, and to maximize profit, we set the selling price such that the contribution margin is maximized.
Given that fixed costs are $20,000, to cover these costs and achieve a profit, the selling price should be set to cover both the variable and fixed costs. So, the profit-maximizing price can be calculated as follows:
[tex]\[ \text{Profit-maximizing price} = \text{Variable cost per unit} + \frac{\text{Fixed costs}}{\text{Number of units}} \][/tex]
[tex]\[ \text{Profit-maximizing price} = 20 + \frac{20000}{1} = 20 + 20000 = 20020 \][/tex]
Therefore, the profit of Molar Express, when the company chooses the profit-maximizing price, will be $20,000.
