Ben Decides to Expand His Ice Cream Store So He

question 36

Multiple Choice

Ben decides to expand his ice cream store so he can begin selling sub sandwiches.He spends $20,000 in preparing his new sandwich shop.His marginal cost of selling sub sandwiches is $3 and he estimates that he can sell 10,000 subs for $6 each.He soon learns of a nearby store that is now selling identical subs for $3.50 each.Ben should:

• A)quit selling subs since his average total cost of selling subs is greater than the $3.50 price he would now have to charge.
• B)sell subs for $3.50 each,considering the $20,000 to be a sunk cost and ignoring it.
• C)sell subs as long the price he receives exceeds his average fixed costs of selling subs.
• D)lower his price to $5 to cover his average total cost of selling subs.

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Definitions:

Peripheral Nervous System

The part of the nervous system that consists of the nerves and ganglia outside of the brain and spinal cord, which connect the central nervous system to limbs and organs.

Abnormal Behaviour

Actions or patterns of behavior that deviate significantly from societal norms or expectations, often causing distress or functional impairment.

Biological Factors

Elements originating from biological processes (such as genetics, neurochemistry, and physiology) that impact an individual's health and behavior.