Food Fanatics caters meals where their cost of producing an extra meal is $25 . Each of their meals is standard and sells for $20 . At this rate what should the company do?
a. Produce more meals and increase their profit
b. Produce fewer meals and increase their profit
c. Not change production
d. None of the above
b
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High net worth helps to diminish the problem of moral hazard problem by
A) requiring the state to verify the debt contract. B) collateralizing the debt contract. C) making the debt contract incentive compatible. D) giving the debt contract characteristics of equity contracts.
Suppose the upward sloping labor supply curve shifts leftward in a labor market with a single employer (monopsony). What happens to the equilibrium wage and level of employment in the market?
A) Wage and level of employment increase. B) Wage increases and level of employment declines. C) Wage decreases and level of employment increases. D) Wage and level of employment decline.