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As a competitor has opened up near Tom's business, Tom's now selling only 2,000 snowballs a month at a reduced price of $4.00. Each snowball
As a competitor has opened up near Tom's business, Tom's now selling only 2,000 snowballs a month at a reduced price of $4.00. Each snowball still costs him $2.50 for labor and other ingredients. Tom also pays $4,000 a month for the space he rents. (1) What is the variable cost of selling 2,000 snowballs? (2) What is the fixed cost of selling 2,000 snowballs? (3) What is the total revenue a month of Tom's snowball business? (4) What is the monthly profit of Tom's snowball business? (5) What is the average variable cost (AVC) of selling 2,000 snowballs? (6) What is the average total cost (ATC) of selling 2,000 snowballs? (7) is the current price high enough to recoup the average variable cost? (8) Is the current price high enough to recoup the average total cost? (9) Is Tom better off staying in the business
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