Author Question: The neighborhood ice cream shop finds that when it charges 3 per ice cream cone, its total revenues ... (Read 88 times)

leilurhhh · **on:** Jun 30, 2018

The neighborhood ice cream shop finds that when it charges 3 per ice cream cone, its total revenues are 90,000 . It has total variable costs of 30,000 and total fixed costs of 40,000 . From this we can infer the:
a. shop should be moved because the rent is too high.
b. price is less than average total cost.
c. economic profits are 20,000.
d. shop will be closed in the long run.
e. shop sells 10,000 ice cream cones.

Question 2

Suppose that the quantity of apples sold increases by 30 percent after the price of pears increases by 15 percent. What is the coefficient of cross elasticity of demand?
a. 3.0.
b. 1.5.
c. 0.2.
d. 2.0.
e. 0.3.