Question

In: Economics

YoYo Ice Cream is a firm in a perfect competitive industry. YoYo Ice Cream sells a...

YoYo Ice Cream is a firm in a perfect competitive industry. YoYo Ice Cream sells a pint of ice cream for $20 per unit. When YoYo Ice Cream produces 200 units of output, the average variable cost is $16, the marginal cost is $18, the and average total cost is $23. Compare the YoYo's Ice Cream profit or loss at 200 units of output with its profit or loss if it were to shut down.

Solutions

Expert Solution

Total cost of producing 200 ice cream is 200 x 23 = 4600 and total revenue is 200 x 20 = 4000.

Profit = total revenue - total cost

4000 - 4600 = -600

the firm is facing a loss or negative profit is -600.

No, it will not shutdown as the price is above the average variable cost in the market.

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

Kilo-cone is an ice-cream store that sells 1kg ice cream cones, and has the following information:...
Kilo-cone is an ice-cream store that sells 1kg ice cream cones, and has the following information: Estimated monthly Sales (in cones) January to March:       45,000 per month April to September:   70,000 per month October to December: 20,000 per month Ice cream cones sell for $1 each from January 1st to March 31st, and $3 each during the rest of the year. Half of the sales are paid in cash, and the other half is on account. 90% of the sales...
Complete question 1 through A to D Part A. Dairy Days Ice Cream sells ice cream...
Complete question 1 through A to D Part A. Dairy Days Ice Cream sells ice cream cones for $4.00 per customer. Variable costs are $2.00 per cone. Fixed costs are $2,400 per month. What is Dairy​ Days' contribution margin​ ratio? A.252​% B.75​% C.58​% D.50​% Part B. The managerial accountant at Right Stripes T−Shirt Company reported the following​ information:   The Right Stripes T−Shirt Company Contribution Margin Income Statement Sales Revenue 1818 × units $17,100 Variable Expenses $9,900 Contribution Margin ​$_____ Fixed...
The ice cream store cool stuff sells exotic ice creams, including Tropical Cream and Green Mango....
The ice cream store cool stuff sells exotic ice creams, including Tropical Cream and Green Mango. Cool Stuff has been varying the prices of these two flavors over the past 16 quarters and has recorded the sales data. The table shows the quantity sold of Tropical Cream, Q, given the price of a half-gallon of Tropical Cream, P, and the price of the other flavor, Green Mango, Po. Use these data to estimate the demand function for Tropical Cream. Are...
The ice cream store cool stuff sells exotic ice creams, including Tropical Cream and Green Mango....
The ice cream store cool stuff sells exotic ice creams, including Tropical Cream and Green Mango. Cool Stuff has been varying the prices of these two flavors over the past 16 quarters and has recorded the sales data. The table shows the quantity sold of Tropical Cream, Q, given the price of a half-gallon of Tropical Cream, P, and the price of the other flavor, Green Mango, Po. Use these data to estimate the demand function for Tropical Cream. Now...
An ice cream shop sells five-scoop ice cream cones, allowing customers to pick which flavors they...
An ice cream shop sells five-scoop ice cream cones, allowing customers to pick which flavors they want stacked on their cone. The shop has the following ice cream flavors available: chocolate, vanilla, strawberry, mint & chocolate chip, rocky road, cookies & cream, cookie dough, cotton candy, butter pecan, birthday cake, and cherry. Note that customers can order a five-scoop cone with multiple scoops of the same flavor. a) How many five-scoop cones are possible if order of the ice cream...
The monthly supply and demand of ice cream (pure and perfect market) are • Requested quantity...
The monthly supply and demand of ice cream (pure and perfect market) are • Requested quantity (Q d) = 200-5P (where P ≡ price) • Quantity offered (Q o) = 5P If the government levies a $ 5 tax on ice cream, buyers will have to pay what percentage of the tax)?
Casper Ice Cream The Casper Ice Cream Company is an ice cream manufacturer in Richmond, Utah...
Casper Ice Cream The Casper Ice Cream Company is an ice cream manufacturer in Richmond, Utah famous for making Fat Boy Ice Cream Sandwiches. The owner, Mr. Casper, the grandson of the founder, is considering replacing an existing ice cream maker and batch freezer with a new maker which has a greater output capacity and operates with less labor. His only alternative is to overhaul his ice cream maker and batch freezer which have a current net book value of...
An ice cream store sells a pint of ice cream for $4.00 each. The shop incurs a monthly fixed cost of $2,000
An ice cream store sells a pint of ice cream for $4.00 each. The shop incurs a monthly fixed cost of $2,000 which includes salaries and rental. The variable cost per pint of ice cream is $1.50. The company is currently selling 600 pints per month.A. How many pints per month does the store need to sell to break-even?B. Using Goal Seek what is the new selling price per pint to achieve a profit of $10,000, if the company continues...
Consider the market for ice cream. Suppose that this market is perfectly competitive. The cost structure...
Consider the market for ice cream. Suppose that this market is perfectly competitive. The cost structure of the typical ice cream producer is as follows. Average total cost is equal to ???(?)=50?+12?, average variable cost is equal to ???(?)=12?, and marginal cost is equal to ??(?)=?. a.) Give a formula for the typical ice cream producer’s average fixed cost ???(?). What is the typical ice cream producer’s total fixed cost? b.) How many ice cream cones will each producer sell...
1.         The market for ice cream is a perfectly competitive market and has the following inverse...
1.         The market for ice cream is a perfectly competitive market and has the following inverse demand curve and inverse supply curve, where p is $ per gallon and Q is billions of gallons of ice cream per year: Demand: p = 16 – 5Q; Supply: p = 4 + 2.5Q a.         Provide a graph of the market for ice cream. Calculate and show the equilibrium price and quantity (in billions of gallons) in the market. b.         Calculate the consumer...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT