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shusha [124]
3 years ago
12

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. The marginal cost of making a wedding cake is $300. In order to maximize profits, Laura should:_________.
a. make more than 20 wedding cakes per month.
b. make fewer than 20 wedding cakes per month.
c. continue to make 20 wedding cakes per month.
d. we do not have enough information to answer the question.
Business
1 answer:
DedPeter [7]3 years ago
7 0

Answer:

b. make fewer than 20 wedding cakes per month.  

Explanation

Laura sells 20 wedding cakes per month.

Her monthly total revenue is $5,000.

Marginal Revenue = $5000 / 20 cakes = $250

The marginal cost of making a wedding cake is $300.

<em>In order to maximize profits, Laura should make fewer than 20 wedding cakes per month.  </em>

<em>The reason is that Laura's marginal cost is higher than her marginal revenue implying that she is spending more on each item than she is gaining. </em>

<em>By reducing one unit of output she will be gaining more revenue.</em>

<em> Profit Maximization Rule Definition  states that if a firm chooses to maximize its profits, it must choose that level of output where Marginal Cost (MC) is equal to Marginal Revenue (MR) and the Marginal Cost curve is rising. i.e. it must produce at a level where MC = MR. </em>

<em>Hence Laura has to make fewer cakes</em>

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Answer:

$2,500

Explanation:

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Closing balance                                $7,500

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Borrowing amount(1$0,000-$7,500)     $2,500

To maintain $10,000 cash balance western company need to borrow $2,500($10,000-$7500)

7 0
3 years ago
Discouraged workers, full-time students, and retirees are all considered part of the __________.
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5 0
3 years ago
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3 0
3 years ago
Weber Company purchased a mining site for $659,964 on July 1. The company expects to mine ore for the next 10 years and anticipa
zzz [600]

Answer:

$41,774

Explanation:

the depletion expense is calculated below

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5 0
3 years ago
When performing capital budgeting, __________ incurred by a project are irrelevant to future investment decisions.
m_a_m_a [10]

Question:

When performing capital budgeting, __________ incurred by a project are irrelevant to future investment decisions.

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D) Taxes

Answer:

The correct answer is C) Sunk Costs      

Explanation:

Capital Budgeting is the art (most applicable to corporate persons) of planning expenditure that will be incurred in the future, especially on long term assets.

The reason you cannot factor Sunk Cost into a Capital Budget is because of  its very nature.

Sunk Costs refer to monies for items that have already been expended and can never be recovered. If it can never be recovered and has <u>already</u>  been incurred, it has no role to play in future considerations especially when the purpose of Capital Budgetting is considered.

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Every other option given in the question above are items that have futuristic qualities.

Cheers

6 0
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