Jessica owns a company that makes pre-packaged sandwiches for convenience stores. The market price for a sandwich is $5 and Jessica is a price-taker. Her daily variable cost for making sandwiches is C(Q) = 2.5Q + (Q2/40) and her marginal cost is MC = 2.5 + (Q/20). She is currently producing sandwiches according to the quantity rule. What should Jessica do if she has an avoidable fixed cost of $50 a day?
A. She should keep producing sandwiches because the price is greater than the minimum of average fixed cost.
B. She should keep producing sandwiches because she is maximizing profit at the current quantity.
C. She should shut down production because the price is greater than the minimum of average cost.
D. She should shut down production because the fixed cost can be avoided if she does.
B. She should keep producing sandwiches because she is maximizing profit at the current quantity.
You might also like to view...
In the above figure, a single-price monopolist charges a price of ________ and the equilibrium competitive price is ________
A) $10; $20 B) $20; $30 C) $30; $20 D) $30; $10
Assume an individual is currently using all of his income to consume two goods — X and Y
If the prices of X and Y are $3 and $8, respectively, and the marginal rate of substitution of X for Y is four, is this individual maximizing his net benefits from consumption? If not, what should he do to increase his total utility?
Under a system of flexible exchange rates, an increase in demand for a nation's currency in the foreign exchange market will: a. cause the nation's currency to appreciate
b. make it more expensive for the nation to import goods. c. cause the nation's balance on current account to shift toward a deficit. d. make it less expensive for foreigners to buy the nation's goods.
Decision management is made up of
A. ratification and monitoring of projects. B. implementation and monitoring of projects. C. initiation and ratification of projects. D. initiation and implementation of projects.