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The Hound Dog Bus Company Contemplates Expanding Its Virginia Operations

Question 71

Multiple Choice

The Hound Dog Bus Company contemplates expanding its Virginia operations by offering service from Fairfax to Arlington.The total cost of the trip would be $120, of which $50 is fixed cost, which it has already paid.The firm expects to earn $60 in revenue from the trip.The Hound Dog Bus Company should


A) offer this service because it will earn a positive economic profit
B) not offer this service because the marginal revenue is less than the marginal cost
C) offer this service because the revenue exceeds fixed cost
D) not offer this service because the total cost exceeds the total revenue
E) offer this service because the added revenue exceeds the added cost of this service

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