Scenario: Jenna makes homemade pastries. Her fixed input in the short run is the mixer. In the long run, she can choose a spatula, hand mixer, or a stand mixer. The following table shows the short-run fixed cost (F.Cand variable cost (VC) of weekly production using each different level of the capital input.

-Refer to the scenario above.If Jenna wants to make 500 pastries per week,which level of capital input should she choose?

Question

Scenario: Jenna makes homemade pastries. Her fixed input in the short run is the mixer. In the long run, she can choose a spatula, hand mixer, or a stand mixer. The following table shows the short-run fixed cost (F.Cand variable cost (VC) of weekly production using each different level of the capital input.
 
-Refer to the scenario above.If Jenna wants to make 500 pastries per week,which level of capital input should she choose?

Quizplus · Accepted Answer

A stand mixer would be the best choice for Jenna if she wants to make 500 pastries per week. At this level of production, the variable cost per unit is lowest with the stand mixer ($0.10) compared to the spatula mixer ($0.25) and hand mixer ($0.15). Additionally, the total cost of production for 500 pastries is also lowest with the stand mixer ($240) compared to the spatula mixer ($365) and hand mixer ($310). Therefore, Jenna should choose the stand mixer in the long run to minimize her costs and maximize profits.

Scenario: Jenna Makes Homemade Pastries