Mary Magnolia from your workbook has variable costs equal to , where y is the number of bouquets she sells per month and where F is the number of square feet of space in her shop. If Mary has signed a lease for a shop with 600 square feet, if she is not able to get out of the lease or to expand her store in the short run, and if the price of a bouquet is $4 per unit, how many bouquets per month should she sell in the short run?
A) 600
B) 1,800
C) 300
D) 1,200
E) 1,320

Question

Mary Magnolia from your workbook has variable costs equal to  , where y is the number of bouquets she sells per month and where F is the number of square feet of space in her shop. If Mary has signed a lease for a shop with 600 square feet, if she is not able to get out of the lease or to expand her store in the short run, and if the price of a bouquet is $4 per unit, how many bouquets per month should she sell in the short run?
A) 600 
B) 1,800 
C) 300 
D) 1,200 
E) 1,320

Quizplus · Accepted Answer

Given that Mary Magnolia has variable costs equal to 11Fy, where F = 600 and the price of a bouquet is $4 per unit.

Total revenue Mary Magnolia will receive if she sells y bouquets per month at a price of $4 per unit is:

Total Revenue = 4y

Total Variable Cost Mary Magnolia has to pay if she sells y bouquets per month is:

Total Variable Cost = 11Fy = 11(600)y = 6600y

To find the quantity of bouquets that Mary Magnolia should sell in the short run, we need to find the value of y such that the Total Revenue is equal to Total Variable Cost.

So, 4y = 6600y

Solving for y, we get:

y = 1200

Therefore, Mary Magnolia should sell 1200 bouquets per month in the short run to break even.

Hence, the answer is D) 1,200.

Mary Magnolia from Your Workbook Has Variable Costs Equal to