If Homer operates a small bakery and sells donuts for$4/dozen, he should:
A)sell an additional dozen donuts as long as the marginal cost of producing an additional dozen donuts is less than $4.(True
Answer )Correct
B)sell an additional dozen donuts as long as the total cost of producing an additional dozen donuts is less than
$4)
C)only sell more donuts if his total revenue is greater than his total cost.
D)sell an additional dozen donuts so long as the fixed cost of production is greater than $4.

Question

Quizplus · Accepted Answer

Homer should sell an additional dozen donuts as long as the marginal cost of producing an additional dozen donuts is less than $4. This is because he will still make a profit from each additional dozen sold and it will increase his total revenue. However, if the marginal cost exceeds $4, he will not make a profit and it would be better to not sell any more donuts.

If Homer Operates a Small Bakery and Sells Donuts For$4/dozen