Calvin Is a Custom Picture Framer

question 126

Multiple Choice

Calvin is a custom picture framer.His total fixed cost is $110 a day,and his average variable cost is $1 a frame.He is maximizing his profit by selling 22 picture frames a day for $6 a frame.Few people know about Calvin's Framery.Calvin thinks that if he spends $10 a day on advertising,he can increase his market and sell 44 picture frames a day for $6 a frame.If Calvin's belief about the effect of advertising is correct,he

• A)cannot increase his economic profit by advertising because advertising increases his average total cost.
• B)cannot increase his economic profit by advertising because advertising increases his total cost.
• C)can increase his economic profit by advertising.
• D)can increase his economic profit by advertising only if he raises the price of a picture frame.
• E)can increase his economic profit by advertising only if he can lower his total variable cost.

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Definitions:

Informational Influence

A type of social influence that involves conforming to the beliefs or behaviors of a group based on the desire for accuracy in situations where the correct action or belief is uncertain.

Autokinetic Effect

A phenomenon where a stationary point of light appears to move in a dark room due to small eye movements.

Social Media Restrictions

Limitations or regulations imposed on the usage of platforms for interaction and content sharing online.

Task Cohesion

The shared commitment among members of a team to achieve a specific goal or complete a designated task.