Alana's Confectionary is located in the East Side Village. When the market price of iced brownies is $5, the profit-maximizing output level is 150 brownies. Her average cost is $4, and her variable cost per unit is $3. Alana's marginal cost is _____, and her short-run profits are _____.
A)$5; $150
B)$5; $300
C)$1; $150
D)$1; $300

Question

Quizplus · Accepted Answer

Alana's marginal cost equals the market price of $5 when she is maximizing profit. Her profit is calculated as (Price - Average Cost) * Quantity = ($5 - $4) * 150 = $150.

Alana's Confectionary Is Located in the East Side Village