The Local Convenience Store Makes Personal Pan Pizzas

question 46

Essay

The local convenience store makes personal pan pizzas. Currently, their oven can produce 50 pizzas per hour. It has a fixed cost of $2,000, and a variable cost of $0.25 per pizza. The owner is considering a bigger oven that can make 75 pizzas per hour. It has a fixed cost of $3,000, but a variable cost of $0.20 per pizza.
a. At what quantity do the two ovens have equal costs?
b. If the owner expects to sell 9,000 pizzas, should he get the new oven?

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Definitions:

Semantics

The branch of linguistics concerned with meaning, including how words and sentences convey meaning.

Pragmatics

The patterns of intonation and social roles associated with a language.

Heuristics

Mental shortcuts or "rules of thumb" that simplify decision making, but can sometimes lead to biased or inaccurate judgments.