Rex's Doughnuts Can Produce Only 100 Doughnuts a Day

question 62

Multiple Choice

Rex's doughnuts can produce only 100 doughnuts a day. The variable cost incurred per unit is $2 and fixed costs incurred per day is $500. At what price should a doughnut be sold to break even?

• A) $10
• B) $5
• C) $7
• D) $4
• E) $8

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Definitions:

Financial Crisis

A significant disruption in the flow of funds in financial markets, characterized by sharp declines in asset prices and firm failures.

Support Level

A price level at which an asset tends to stop falling because demand is strong enough to prevent the price from declining further.

Market

A place or platform where buyers and sellers come together to exchange goods, services, or financial instruments.

Short Interest

The total number of shares of a particular stock that have been sold short by investors but have not yet been covered or closed out.