Question

Mars Inc. produces 100,000 boxes of Snickers bars which sell for $4 a box. If variable costs are $3 per box, and it has $150,000 fixed operating costs, in the short run, it should

Answer 1

Answer:

It should continue the production in the short-run.

Explanation:

Given the unit produced by Mars Inc. = 100000 boxes.

The selling price of boxes = $4 per box.

The variable costs = $3 per box.

The fixed costs = $150000

The total sales revenue = number of boxes × selling price

= 100000 × 4

= $ 400000

In the short run, the firm should continue its production because it still covers the variable costs.