Answer:
The best option is (d). should shut down, since it must be losing money
Step-by-step explanation:
Step 1: Calculate the total revenue from sales
Total revenue from sales=price per unit×number of units
where;
price per unit=$20
number of units=300
replacing;
Total revenue=(20×300)=$6,000
Step 2: Total cost from marginal cost
The marginal cost is the change in total production cost caused by increasing a unit in production.
Total marginal cost=(20×300)+(22×1)=$6,022
Step 3: net profit
net profit=total revenue-total marginal cost
where;
total revenue=$6,000
total marginal cost=$6,022
replacing;
profit=(6,000-6,022)=-$22
This means production of additional units increases the production cost and thus reducing the profits too.