Question



Figure 11-6
Suppose you are the owner of a picture frame store. Let's assume that the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). Figure 11-6 above shows that by selling 200 pictures, your picture frame store will
A. break even.
B. earn a profit.
C. incur a loss.
D. have no fixed costs.
E. have no variable costs.

Answer

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