ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 6, Problem 3.9P
To determine
How to choose different units of goods when we pay an entry fee but need not pay for the individual consumption of goods.
Concept Introduction: Not required
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Price (dollars per CD-R)
6.
Do
Quantity (CD-Rs per week)
Write an example of your choice that would fit to the figure above.
Typed plzzz And Asap
Thanks
A. At XYZ Restaurant, which sells only pepperoni pizza, has the cost profile:
[Note that variable costs are per pizza]
Fixed Costs
Variable Costs
General
$1,500 Flour
$0.50
Labor
Rent
$3,000 Yeast
s0.05
Insurance
$200
Water
$0.01
Advertising $500 Cheese $3.00
$450 Pepperoni $2.00
Utitilies
Total
$5,650 Total
$5.56
Based on the total variable expenses per pizza, we now know that XYZ Restaurant must price its
pizzas at $5.56 ($0.50 + $0.05 + $0.01 + $3.00 + $2.00) or higher just to cover those costs.
We also know that if the pizzeria charges $10 for the finished product, then it receives $4.44 per
pizza to contribute to the fixed costs and ultimately the restaurants overall profits.
Question: How many pizzas does XYZ Restaurant need to sell at $10 each to cover
all those fixed monthly expenses?
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