Sand Art Sells Ceramic Pots

question 9

Multiple Choice

Sand Art sells ceramic pots. The pots sell for $30 each with variable costs totalling $25 per pot. Fixed costs are $50,000. The number of pots that have to be sold to break even is:

• A)10,000 pots.
• B)8,000 pots.
• C)2,000 pots.
• D)7,000 pots.

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and ease of entry and exit.

MC Curve

The graph that shows the relationship between the marginal cost of producing each additional unit and the quantity produced.

Total Profit

The difference between total revenue and total costs, representing the overall earning performance of a business.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogenous product, free entry and exit, and perfect information, leading to firms being price takers.