Samira's Smoothies Has Fixed Costs of $1600 Per Month

question 71

Multiple Choice

Samira's Smoothies has fixed costs of $1600 per month. The only variable costs Samira incurs are for the ingredients and labour needed to produce smoothies. These cost $1.50 per drink. Samira sells her delicious concoctions for $3.50 each. How many smoothies will Samira have to sell per month to break even?

• A) 1000
• B) 800
• C) 600
• D) 450

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Definitions:

Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable.

Quantity Demanded

The total amount of a good or service that consumers are willing to buy at a given price over a specified period.

Marginal Tax Rates

The rate at which an additional dollar of income is taxed, showing the percentage of tax applied to your income for each tax bracket you pass through.

Laffer Curve

A theoretical representation of the relationship between tax rates and government revenue, suggesting there is an optimal tax rate that maximizes revenue.