Rodrigo Operates a Dry-Cleaning Service and Charges Customers $5 Per

question 111

Multiple Choice

Rodrigo operates a dry-cleaning service and charges customers $5 per article of clothing.Based on his knowledge of operations,the 1,000 th piece of clothing costs him $4.95 to dry-clean.If he takes additional business,however,the 1,001st piece will cost $5 for the service.Does he take the additional business?

• A) No,he has hidden costs that far exceed his estimate of $5,so he loses money.
• B) No,taking on additional business doesn't earn him any money.
• C) Yes,if he turns away business,his service will be forced to close.
• D) Maybe.If a competitor is accepting that many customers,he must at least equal that amount.
• E) Yes.At a $5 cost,he breaks even and is indifferent.He necessarily turns away business when the cost of the additional unit exceeds the income.

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