Scenario 16-4
Peter Operates an Ice Cream Shop in the Center

question 217

Short Answer

Scenario 16-4
Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter's demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter's ice cream buys a double scoop cone because it's so delicious.)
$\begin{array}{|l|l|l|l|l|}\hline \text { Quantity } & \text { Price } & \text { MR } & \text { MC } & \text { ATC } \\\hline 20 & \$ 5.60 & \$ 5.20 & \$ 2.20 & \$ 2.05 \\\hline 40 & \$ 5.20 & \$ 4.40 & \$ 2.40 & \$ 2.10 \\\hline 60 & \$ 4.80 & \$ 3.60 & \$ 2.60 & \$ 2.15 \\\hline 80 & \$ 4.40 & \$ 2.80 & \$ 2.80 & \$ 2.20 \\\hline 100 & \$ 4.00 & \$ 2.00 & \$ 3.00 & \$ 2.25 \\\hline 120 & \$ 3.60 & \$ 1.20 & \$ 3.20 & \$ 2.30 \\\hline 140 & \$ 3.20 & \$ 0.40 & \$ 3.40 & \$ 2.35 \\\hline 160 & \$ 2.80 & -\$ 0.40 & \$ 3.60 & \$ 2.40 \\\hline 180 & \$ 2.40 & -\$ 1.20 & \$ 3.80 & \$ 2.45 \\\hline\end{array}$

-Refer to Scenario 16-4. When Peter maximizes his profits, what is his total cost per day?

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Definitions:

Economic Recession

A period of temporary economic decline during which trade and industrial activities are reduced, generally identified by a fall in GDP in two successive quarters.

Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Random Variation

The variability in data that arises due to chance and cannot be attributed to any specific cause or pattern.

Stock Market Prices

The current price at which shares of a company are bought and sold in the stock market.