Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 3, Problem 2P
a.
To determine
If the restaurant should stay open or closed when marginal revenue is
b.
To determine
If the restaurant should stay open or closed when marginal revenue is
c.
To determine
Marginal revenue that would make
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Bill runs a business that makes custom-printed towels. It will cost him $8 each to purchase and print on towels, and he will have to pay a rent of $1,700 per month for him workshop. Based on market research, Bill estimates that he can sell custom towels for $25 each.
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b) Calculate the break-even in dollars (round off to the nearest cent).
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Nick is planning on starting a mobile pizza oven. He is expecting his customers to spend $20 per pizza. It is estimated that the costs associated with the ingredients will be $5 per pizza. In addition, his fixed costs for renting the mobile oven is $150 per day.
1) How many pizzas does Nick need to sell to break-even per day?
2) If Nick wants to make a profit of $300 and sell 25 pizzas per day, calculate the price he should charge per pizza.
3) If Nick increases the price per pizza to the amount found in part (b) then explain the effect on the break-even number of pizzas sold. Assume the fixed costs and the variable costs remain unchanged. Do not re-calculate the break-even quantity, x, for this question however you may quote the break-even formula and contribution margin to aid your explanation.
Chapter 3 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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