# Matt owns a donut shop. He rents a space for \$1500 a month and pays his only employee \$300 a month. Matt can serve 1000 donuts each month. His variable cost per donut is \$2. what price does Carlos need to charge in order to make a profit of \$2000 per month? A. \$3.80 B. \$5.80. and why?

Boy. those are expensive donuts. And what a strange demand curve Matt faces.

Use algebra. Total costs are 1500+300+(2*1000) = \$3800.
If he manages to sell hs 1000 donuts for 5.80 each, total revenue is \$5800 giving him a \$2000 cash profit.

## To find out the price Carlos needs to charge in order to make a profit of \$2000 per month, we can use the following equation:

Total Revenue - Total Cost = Profit

We already know the Total Cost is \$3800:

Total Cost = \$1500 (rent) + \$300 (employee) + (\$2 * 1000) (variable cost per donut * number of donuts)
Total Cost = \$1500 + \$300 + \$2000 = \$3800

Now, we need to calculate the Total Revenue. Since Carlos can sell 1000 donuts each month, we can multiply the number of donuts by the price per donut:

Total Revenue = Number of Donuts * Price per Donut
Total Revenue = 1000 * Price per Donut

Now, we can substitute the values in the equation:

Total Revenue - Total Cost = Profit
1000 * Price per Donut - \$3800 = \$2000

Rearranging the equation to isolate the Price per Donut:

1000 * Price per Donut = \$2000 + \$3800
1000 * Price per Donut = \$5800

Dividing both sides by 1000:

Price per Donut = \$5800 / 1000
Price per Donut = \$5.80

Therefore, Carlos needs to charge \$5.80 for each donut in order to make a profit of \$2000 per month. The correct option is B. \$5.80.