Scenario: You plan to open your own donut shop. After doing some research and planning, you have created the table below to help you estimate how much to charge for your donuts to make a profit. You already identified various amounts of donuts you could potentially produce as well as the related variable and fixed costs.# of DonutsVariable CostsFixed CostsTotal Costs Average Total Cost Average Variable CostMarginal Cost2,000$2,000$10,000$12,000 3,000$2,500$10,000$12,500 5,000$3,500$10,000$13,500 10,000$4,000$10,000$14,000 15,000$7,000$10,000$17,000 25,000$20,000$10,000$30,000 50,000$80,000$10,000$90,000 Step TwoGraph the Average Total Costs, Average Variable Costs, and Marginal Costs on the same graph. Step ThreeAnswer the following questions in your Word document and submit your completed assignment.What is the lowest price you could charge for a donut and still make a profit?How many donuts would you need to produce?How much will your group sell your donuts for?Now, look up a couple of local donut shops. Compare their prices with the prices that you decided on as a group. How do your prices compare with theirs? Would you be able to compete with them? Why or why not? Explain your reasoning.

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Answered: Scenario: You plan to open your own…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 3CQQ

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Scenario: You plan to open your own donut shop. After doing some research and planning, you have created the table below to help you estimate how much to charge for your donuts to make a profit. You already identified various amounts of donuts you could potentially produce as well as the related variable and fixed costs.

# of Donuts	Variable Costs	Fixed Costs	Total Costs	Average Total Cost	Average Variable Cost	Marginal Cost
2,000	$2,000	$10,000	$12,000
3,000	$2,500	$10,000	$12,500
5,000	$3,500	$10,000	$13,500
10,000	$4,000	$10,000	$14,000
15,000	$7,000	$10,000	$17,000
25,000	$20,000	$10,000	$30,000
50,000	$80,000	$10,000	$90,000

Step Two

Graph the Average Total Costs, Average Variable Costs, and Marginal Costs on the same graph.

Step Three

Answer the following questions in your Word document and submit your completed assignment.

What is the lowest price you could charge for a donut and still make a profit?
How many donuts would you need to produce?
How much will your group sell your donuts for?
Now, look up a couple of local donut shops. Compare their prices with the prices that you decided on as a group. How do your prices compare with theirs? Would you be able to compete with them? Why or why not? Explain your reasoning.

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