Suppose You Have Just Opened a Store to Sell Espresso

question 157

Multiple Choice

Suppose you have just opened a store to sell espresso machines.Both you and a competing store buy this machine from a manufacturer for $130 each.Your competitor who has a store of the same size as yours is currently selling about 10 machines a month at a price of $200 per machine.You expect to sell about 6 machines a month at a price of $220 per machine.If you lower your price, you expect to make a loss.Which of the following could explain why your competitor is able to profitably sell the machine at a lower price although the cost of purchasing the machine is the same for the both of you?

• A)The competing store probably has a lower marginal cost of production.
• B)The competing store probably has a lower average variable cost of production.
• C)The competing store's goal is to maximize revenue and not profit.
• D)The competing store probably has a lower average cost because average fixed cost falls as output increases.

---

Definitions:

Nutrition

The study and practice of eating and utilizing foods, focusing on how substances in food provide energy or are converted into body tissues and provide health maintenance.

Learned

Acquired or developed through experience or education; referring to knowledge or skills not innate but gained through teaching or practice.

Cosmetic Surgical

Medical procedures focused on enhancing personal appearance through surgical and non-surgical techniques.

Nonsurgical Procedures

Medical treatments that do not involve an operation or incisions into the body, used in various therapeutic or diagnostic processes.