Mary Magnolia from your workbook has variable costs equal to y²/F, 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

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Quizplus · Accepted Answer

The variable cost formula can be simplified as follows: y²/F = y(4-1.2y/600) Where 4 is the price per unit, 1.2 is the variable cost per unit, and 600 is the square footage of her shop. To find the short run profit-maximizing quantity, we need to set the marginal revenue (MR) equal to the marginal cost (MC), which in this case is the variable cost. MR = (4-2y/600) MC = 1.2 MR = MC 4-2y/600 = 1.2 y = 1200 Therefore, Mary should sell 1,200 bouquets per month in the short run to maximize her profit.

Mary Magnolia from Your Workbook Has Variable Costs Equal to Y2/F

Mary Magnolia from Your Workbook Has Variable Costs Equal to Y²/F