Maddie Noticed That Many Students on Campus Had T-Shirts and Sweatshirts

question 51

Multiple Choice

Maddie noticed that many students on campus had t-shirts and sweatshirts with Greek organization letters or club names on them. Recognizing that there was a huge market for this attire, Maddie rented a store front and a silk screening machine to get into the t-shirt business. Maddie's rent is $1,000 a month, including utilities. The silk screen machine leases for $300 a month. Maddie can buy blank t-shirts for $6 each and sweatshirts for $10 each. Maddie calculated the cost of materials for the silk screening at $2 per unit. Considering only the figures presented above, what are Maddie's fixed costs?

• A) $1300 a month
• B) $1000 a month
• C) $8 a unit
• D) $700 a month

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Definitions:

Monopolistic Competitor

A firm in a market structure where many companies sell products that are similar but not identical, allowing for competition on factors beyond price.

Monopolist

A monopolist is an individual or entity that holds exclusive control over the supply or trade in a commodity or service, thus being able to significantly influence or set prices.

Perfect Competitor

A firm that operates in a perfectly competitive market, characterized by selling a homogenous product and having no control over the market price.

Output

In economics, output refers to the total amount of goods and services produced by an economic system or entity.