What is the break-even price and shut-down price

Reference no: EM13245113

Kate's Katering provides catered meals, and the catered meals industry is perfectly competitive. Kate's machinery costs $100 per day and is the only fixed input. Her variable cost is comprised of the wages paid to the cooks and the food ingredients.

The variable cost associated with each level of output is given in the accompanying table.

Qty. of Meals || VC
0...............|| $0
10.............|| $200
20.............|| $300
30.............|| $480
40.............|| $700
50.............|| $1000

a. Calculate the total cost, the average variable cost, the average total cost, and the marginal cost for each quantity of output.

Quantity of meals || FC || VC || TC || MC || AVC || ATC
0.....................||$100 || $0
10....................||100 || 200
20....................||100 || 300
30....................||100 || 480
40....................||100 || 700
50....................||100 ||1,000

b. What is the break-even price? What is the shut-down price?

c. Suppose that the price at which Kate can sell catered meals is $21 per meal. In the short run, will Kate earn a profit? In the short run, should she produce or shut down?

d. Suppose that the price at which Kate can sell catered meals is $17 per meal. In the short run, will Kate earn a profit? In the short run, should she produce or shut down?

e. Suppose that the price at which Kate can sell catered meals is $13 per meal. In the short run, will Kate earn a profit? In the short run, should she produce or shut down?

Reference no: EM13245113

Questions Cloud

Politics motivated spanish exploration and expansion : During the late 15th and 16th centuries politics motivated Spanish exploration and expansion. My problem is that I can't really find (or really know where to look) for these particular 'politics.' Obviously economics influenced the desire for expansi..

Find the area charge density on the inner surface : A point charge q = 1.45 nC is placed in the center of a spherical cavity of an isolated spherical conductor of inner radius 4 cm and outter radius 12cm

A peom that explains the early middle ages : I have to write A peom that explains the early middle ages and describe what was happenening throughout the period of 500-1000 ad. I have to include the terms: feudalism, manor, peasants, charlemagne, church pope, and vikings. Any tips on how to writ..

Calculate the gravitational force on a spacecraft : Calculate the gravitational force on a spacecraft 8700km above the Earth's surface if its mass is 1200kg

What is the break-even price and shut-down price : Kate's Katering provides catered meals, and the catered meals industry is perfectly competitive. Kate's machinery costs $100 per day and is the only fixed input. Her variable cost is comprised of the wages paid to the cooks and the food ingredient..

Linear relationship between the temperature and the amount : The city of Oakdale wishes to see if there is a linear relationship between the temperature and the amount of electricity used (in kilowatts). Based on the data in the table below, is there a significant linear relationship between temperature and th..

Crucial concerns and ideals of the 19th century : Marx and Darwin are often regarded as two of the most important thinkers of the nineteenth century. one of the reasons suggest for their influence is that both men developed comprehensive intellectual systems which addressed and reflected the social ..

Would shifting from paychecks to payroll cards reduce firm : In an effort to reduce their total costs, many companies are now replacing paychecks with payroll cards, which are stored-value cards onto which the companies can download employees' wages and salaries electronically.

Find the gravitational force between the two masses : Two masses are placed on the x axis. The first mass 320kg is located at x = 310cm , the second mass 660kg is at the origin

User Account

All Pages