Edward Cheezer's Makes and Sells Frozen Four-Cheese Pizzas, New York-Style

question 136

Multiple Choice

Edward Cheezer's makes and sells frozen four-cheese pizzas, New York-style. The expected selling price is $10 per pizza. The projected variable cost per pizza is $6. The estimated fixed costs per month are $10,000. If 6,000 pizzas are sold in a given month and fixed costs increase by $5,000, the overall profit is

• A) $15,000.
• B) $19,000.
• C) $20,000.
• D) $9,000.

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Definitions:

Marginal Cost

The rise in expenses related to the production of an additional unit of a product or service.

Industry Output

The total production of goods and services by all firms operating within a certain industry over a specific period.

Discount Sources

Various means or strategies by which buyers can obtain goods or services at reduced prices, such as coupons, clearance sales, or promotional codes.

Cost Function

A mathematical formula that calculates the total cost incurred by a company to produce a specific quantity of a product or service.