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11 December, 09:32

2. The PPS Company sells lead pencils in a perfectly competitive market for $5 per box of a dozen pencils. The firm currently produces 2,500 boxes of lead pencils each week and average total cost at this level of production is $5.15. What level of profit is this firm earning? Explain

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  1. 11 December, 09:42
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    Gross profit = - 375

    Explanation:

    Giving the following information:

    The PPS Company sells lead pencils in a perfectly competitive market for $5 per box of a dozen pencils. The firm currently produces 2,500 boxes of lead pencils each week and the average total cost at this level of production is $5.15.

    Sales = 2,500*5 = $12,500

    Cost of goods sold = 2,500*5.15 = $12,875

    Gross profit = - 375
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