The Metal Shop Produces 1

The Metal Shop produces 1.7 million metal fasteners a year for industrial use. At this level of production, its total fixed costs are $486,000 and its total costs are $791,000. The firm can increase its production by 5 percent, without increasing either its total fixed costs or its variable costs per unit. A customer has made a one-time offer for an additional 50,000 units at a price per unit of $.165. Should the firm sell the additional units at the offered price? Why or why not?

A) Yes; The offered price is less than the marginal cost.
B) Yes; The offered price is equal to the marginal cost.
C) No; The offered price is less than the marginal cost.
D) Yes; The offered price is greater than the marginal cost.
E) No; The offered price is greater than the marginal cost.