A Pie Company Has Two Employees Who Each Earn $30

question 25

Multiple Choice

A pie company has two employees who each earn $30 000 a year, and it pays $10 000 rent every year. The ingredients for a pie, including the gas to cook it, cost $10 per pie. If pies are sold at $20 each, the break-even point for the company (calculated pre-tax) is

• A)3 500 pies.
• B)4 000 pies.
• C)6 000 pies.
• D)7 000 pies.
• E)8 000 pies.

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Definitions:

Marginal Revenue

The additional income produced through the sale of one more unit of a product or service.

Total Cost

The overall expense incurred in the production of goods or services, including both fixed and variable costs.

Marginal Revenue

The heightened revenue from selling an additional unit of a product or service.

Perfectly Competitive Firm

A theoretical concept describing a company that operates in a market where no single producer or consumer has the market power to influence prices.