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tigry1 [53]
3 years ago
10

Laura is a gourmet chef who runs a small catering business in a competitive industry. laura specializes in making wedding cakes.

laura sells 20 wedding cakes per month. her monthly total revenue is $5,000 and her average variable costs are $180. the marginal cost of making a wedding cake is $200. in order to maximize profits, laura should:
Business
1 answer:
quester [9]3 years ago
8 0
<span>Laura should both reduce her variable costs and increase her total revenue. If she charged 10% more ($275 instead of $250) and reduced her variable costs by 10% ($162 instead of $180), she would nearly double her profits. She would profit $93 per cake compared to her current $50.</span>
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