Question
Asked Nov 7, 2019

Georges T-Shirt Shop produces 5,000 custom printed T-shirts per month. Georges fixed costs are $15,000 per month. The marginal cost per T-shirt is a constant $4. What is his break-even price? What would be Georges break-even price if he were to sell 50% more shirts?

check_circleExpert Solution
Step 1

Given information-

The producer initially produces 5,000 T-shirts. The fixed cost is equal to $15,000. And marginal cost is constant equal to $4.

Step 2

The price at which the revenue received from the sale of a good only covers the cost of producing that good is called breakeven price. Thus, at this price the producer earns zero profit.

Step 3

Therefore, at break...

Total revenue Total cost
PQ Fixed cost + Variable cost
here
(1)
P is the break even price
Qis the quantity produced
Fixed cost is given as $15,000
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Total revenue Total cost PQ Fixed cost + Variable cost here (1) P is the break even price Qis the quantity produced Fixed cost is given as $15,000

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