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11 August, 10:16

Yam is a gourmet chef who runs a small catering business in a competitive industry. Yam specializes in making wedding cakes. Yam sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $300. In order to maximize profits, Yam should:

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  1. 11 August, 10:46
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    She should continue producing 20 wedding cakes a month.

    Explanation:

    From the information in the question

    Revenue per unit = Total revenue/Units produced

    Revenue per unit = 5000/20 = $250

    We were given the marginal cost as $200

    So our revenue per month ($250) is higher than marginal cost ($200)

    Yam is making a profit of $50, so she should continue producing 20 cakes per month
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Home » Business » Yam is a gourmet chef who runs a small catering business in a competitive industry. Yam specializes in making wedding cakes. Yam sells 20 wedding cakes per month. Her monthly total revenue is $5,000.
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