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Problem: Johnson's candles has fixed costs of $4000 each month. Its average variable costs are $ 3 per candles. The firm's current level of demand is 2500 candles per month. The average price of its candles $6.
Question 1: Using an example explain what is meant by a fixed cost of production.
Question 2: Calculate the firm's current average costs.
Question 3: Calculate the firm's current total costs of production each month
Question 4: Calculate the profit if demand increases to 3000 candles per month
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