Jessica owns a company that makes pre-packaged sandwiches for convenience stores.The market price for a sandwich is $5 and Jessica is a price-taker.Her daily cost for making sandwiches is C(Q)= 2.5Q + (Q²/40)and her marginal cost is MC = 2.5 + (Q/20).How many sandwiches should Jessica produce each day? A) 20 B) 40 C) 45 D) 50

Question

Quizplus · Accepted Answer

Jessica should produce where her marginal cost (MC) equals the market price, as she is a price-taker. Setting MC = $5 gives 2.5 + (Q/20) = 5. Solving for Q, we subtract 2.5 from both sides to get Q/20 = 2.5, and then multiply both sides by 20 to find Q = 50.

Jessica Owns a Company That Makes Pre-Packaged Sandwiches for Convenience