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An entrepreneur is considering opening a coffee shop in downtown Cookeville. The building that he is considering will have a monthly lease payment of $3200 and basic utility costs of $600 per month. Two employees will be hired at $10.00/hour/employee (including overhead and benefits). Each employee will work an average of 170 hours per month. The average revenue per customer is estimated at $7.00. The variable cost of serving each customer is estimated at $2.00.

(a) Calculate how many customers per month it will take for the coffee shop owner to breakeven.

(b) How many customers would need to be served per month to achieve a monthly profit of $5,000?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9466553

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