If Homer Operates a Small Bakery and Sells Donuts for $4/dozen

question 69

Multiple Choice

If Homer operates a small bakery and sells donuts for $4/dozen, he should:

• A) sell an additional dozen donuts as long as the marginal cost of producing an additional dozen donuts is less than $4.
• B) sell an additional dozen donuts as long as the total cost of producing an additional dozen donuts is less than $4.
• C) only sell more donuts if his total revenue is greater than his total cost.
• D) sell an additional dozen donuts so long as the fixed cost of production is greater than $4.

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Definitions:

Finished Goods Inventories

Stocks of completed products awaiting sale or shipment, representing one of the critical components of a company's inventory.

Unique Needs

Specific requirements or preferences that differ among individuals or entities, often necessitating customized solutions.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.