In a perfectly competitive market there is a donut shop that sells 1,200 donuts daily. Each donut sells for the market price of $0.75 and they sell out every day. Assume that this company has labor costs of $275 and materials costs of $400. a. At what price would this donut shop shutdown in the short run? b. Using only variable costs, what is the donut shop's daily € profit?
In a perfectly competitive market there is a donut shop that sells 1,200 donuts daily. Each donut sells for the market price of $0.75 and they sell out every day. Assume that this company has labor costs of $275 and materials costs of $400. a. At what price would this donut shop shutdown in the short run? b. Using only variable costs, what is the donut shop's daily € profit?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter8: Perefect Competition
Section: Chapter Questions
Problem 10SQP
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Transcribed Image Text:In a perfectly competitive market there is a donut shop that
sells 1,200 donuts daily. Each donut sells for the market price
of $0.75 and they sell out every day. Assume that this company
has labor costs of $275 and materials costs of $400.
a. At what price would this donut shop shutdown in the short
run?
b. Using only variable costs, what is the donut shop's daily
profit?
00
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