# 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.