Scenario 13-2

question 25

Multiple Choice

Scenario 13-2. Benjamin has been running his kennel service for one year. So far, business has been good and all expenses have been met each month, leaving a small profit. He has a large building capable of handling a total of 35 dogs. Each pen has fresh water supplied through pipes, an automated feeder, and a heating/cooling unit that keeps each pen at a comfortable 68 degrees. Benjamin rents each pen at a price of $30 per day. His total fixed costs each month are $500. Average variable costs are $12.
-In Scenario 13-2, based on the numbers above, what is Benjamin's breakeven point?

• A) 26 pen rentals each month
• B) 28 pen rentals each month
• C) 30 pen rentals each month
• D) 32 pen rentals each month

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Definitions:

Relatively Easy Entry

Characterizes markets where new competitors can join with minimal barriers, such as low startup costs or regulatory hurdles.

Similar Products

Products that serve the same or similar purposes and can be used interchangeably by consumers.

Large Number

A vague term often referring to a quantity much larger than what is typically encountered in everyday life.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for significant differentiation.