2) Staybrite Paint Co. sold 20,000 litres of paint last month, the average variable costs being 4.20 per litre. Each litre contributes 30% of its revenue to fixed costs and profits.

a) If the firm reduces its price by 10%, how many litres will it have to sell this month to obtain the same profits as it earned last month?

b) Staybrite's main competitor is Glamwall, a firm whose product sells for 6. If Glamwall's profit contribution per litre is 25%, what is its level of average variable costs?

c) If both companies have the same level of fixed costs, how many litres must Glamwall have to sell to make the same profit as Staybrite?