Expected sales next year are 40,000 units with a standard deviation of 4,000 units. 1. Determine the probability that Cool-Aire will incur an operating loss.

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Cool-Aire Corporation manufactures a line of room air conditioners. Its breakeven sales level is 33,000 units. Sales are approximately normally distributed.

Expected sales next year are 40,000 units with a standard deviation of 4,000 units.

  1. Determine the probability that Cool-Aire will incur an operating loss.

  2. Determine the probability that Cool-Aire will operate above its break-even point.

  3. Assume that a firm in a perfectly competitive industry has the following total cost schedule:

a. Calculate a marginal cost and an average cost schedule for the firm.

b. If the prevailing market price is $17 per unit, how many units will be produced and sold? What are profits per unit? What are total profits?

c. Is the industry in long-run equilibrium at this price?