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Suppose Sarah owns a small company that makes wedding cakes

Accounting

Suppose Sarah owns a small company that makes wedding cakes. The table below shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day. The baker business is competitive.

 

Number of Cakes Per Day Total Cost Per Day ($)
0 100
1 180
2 220
3 300
4 400
5 520
6 660

A. Compute average fixed costs, average variable costs, and the marginal cost of Sarah's bakery.

B. If each cake sells for $125, compute Sarah's profit/loss.

C. If Sarah's fixed costs go up by $200, in the short run, should she continue production or should she close her bakery? Why?

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