Posted by **Kay** on Saturday, December 9, 2006 at 2:30pm.

Matt owns a donut shop. He rents a space for $1500 a month and pays his only employee $300 a month. Matt can serve 1000 donuts each month. His variable cost per donut is $2. what price does Carlos need to charge in order to make a profit of $2000 per month? A. $3.80 B. $5.80. and why?

Boy. those are expensive donuts. And what a strange demand curve Matt faces.

Use algebra. Total costs are 1500+300+(2*1000) = $3800.

If he manages to sell hs 1000 donuts for 5.80 each, total revenue is $5800 giving him a $2000 cash profit.

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