Suppose Sarah owns a small company that makes wedding cakes. The accompanying table shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day. $$\begin{array} { | c | c | }
\hline \text { Number of Cales Per Day } & \text { Tatal Cast Per Day } \
\hline 0 & \$ 100 \
\hline 1 & \$ 180 \
\hline 2 & \$ 220 \
\hline 3 & \$ 300 \
\hline 4 & \$ 400 \
\hline 5 & \$ 520 \
\hline 6 & \$ 660 \
\hline
\end{array}$$
If the market for wedding cakes is perfectly competitive, and wedding cakes sell for $125 each, then Sarah should produce ________ cakes per day.

Question

Suppose Sarah owns a small company that makes wedding cakes. The accompanying table shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day. $$\begin{array} { | c | c | } 
\hline \text { Number of Cales Per Day } & \text { Tatal Cast Per Day } \
\hline 0 & \$ 100 \
\hline 1 & \$ 180 \
\hline 2 & \$ 220 \
\hline 3 & \$ 300 \
\hline 4 & \$ 400 \
\hline 5 & \$ 520 \
\hline 6 & \$ 660 \
\hline
\end{array}$$  
If the market for wedding cakes is perfectly competitive, and wedding cakes sell for $125 each, then Sarah should produce ________ cakes per day.

Quizplus · Accepted Answer

Sarah should produce 5 cakes per day because the marginal cost of producing the 5th cake ($120) is less than the price ($125), but the marginal cost of the 6th cake ($140) exceeds the price.

Suppose Sarah Owns a Small Company That Makes Wedding Cakes