An ice cream producer has fixed costs of $70,000per month, and it can produce up to 15,000 icecream tubs per month. Each tub costs $10 in themarket whilethe producer faces variable costs of $3 per tub.a. What is the economic breakeven level ofproduction?b.Calculate the ice cream producer's monthlyprofits at full capacity. What would happen to themonthly profits if another ice cream producerentered themarket, driving the price of ice cream tubs downto $7 per unit?

Economic breakeven is the point at which total cost and total revenue are equal, which means…

1. What is the economic breakeven level of production? p.Calculate the ice cream producer's monthly orofits at full capacity. What would happen to tl nonthly profits if another ice cream producer entered the

1. What is the economic breakeven level of production? p.Calculate the ice cream producer's monthly orofits at full capacity. What would happen to tl nonthly profits if another ice cream producer entered the

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 41P: A computer company produces affordable, easy-to-use home computer systems and has fixed costs of...

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Question

An ice cream producer has fixed costs of $70,000
per month, and it can produce up to 15,000 ice
cream tubs per month. Each tub costs $10 in the
market while
the producer faces variable costs of $3 per tub.
a. What is the economic breakeven level of
production?
b.Calculate the ice cream producer's monthly
profits at full capacity. What would happen to the
monthly profits if another ice cream producer
entered the
market, driving the price of ice cream tubs down
to $7 per unit?

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