Suppose That the Total Fixed Cost for a Guitar Manufacturer

question 94

Multiple Choice

Suppose that the total fixed cost for a guitar manufacturer is $90.The marginal cost of the first guitar produced is $80 and decreases by $10 for the next three guitars produced.Thereafter,the marginal cost increases by $10 for each successive guitar.
-Refer to the information above to answer this question.If the manufacturer can sell her guitars for $70,what will be her profit or loss at the optimal output?

• A)She will break even.
• B)A loss of $50.
• C)A profit of $50.
• D)A loss of $60.
• E)A loss of $90.

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