Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
A barber currently cuts hair for 50 clients per week and earns a profit
A barber currently cuts hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?
a) Yes, because cutting hair is profitable,
b) No, because he may not be able to sell more services,
c) It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients,
d) It depends on the average cost of serving more clients and the average revenue he will earn from serving more clients.
Expert Solution
The correct answer is (c).
- If a barber currently earns a profit by cutting hair for 50 clients, the expansion decision depends on the _marginal cost and the marginal revenue he will earn from increasing the number of customers served. Marginal cost is a term that describes the change in the total costs of production as a result of making one more additional unit. Computing marginal costs aim to get the point where the organization achieves economies of scale. In contrast, marginal revenue is the additional income that a business earns from the sale of an extra unit of production. Profit maximizing companies and individuals will set their output level where the marginal costs and benefits correspond.
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
