Question

The company Lucky Food produces and delivers meals in a small town. There are no other competitors, so Lucky Food is the only supplier in the local market. This is why the company can set every price for its meals, based on the analysis of demand schedule and its elasticity. The economists of Lucky Food have conducted market research and found out that the demand curve is linear for this market and can be shown as the following function: P = 25 - 0.0018Q. Lucky Food has fixed costs of running the business $20,000 USD and variable cost for each meal $5. What price and quantity on the demand line represent the break-even point?

          The company Lucky Food produces and delivers meals in a small town. There are no other competitors, so Lucky Food is the only supplier in the local market. This is why the company can set every price for its meals, based on the analysis of demand schedule and its elasticity. The economists of Lucky Food have conducted market research and found out that the demand curve is linear for this market and can be shown as the following function: P = 25 - 0.0018Q. Lucky Food has fixed costs of running the business $20,000 USD and variable cost for each meal $5. What price and quantity on the demand line represent the break-even point?

Added by Anthony A.

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