Question

Marcia is a fashion designer who runs a small clothing business in a competitive industry. Marcia specializes in making designer dresses. Marcia sells 10 dresses per month. Her monthly total revenue is $5,000. The marginal cost of making a dress is $600. In order to maximize profits, Marcia should

Answer 1

Here are the missing options:

a. make fewer than 10 dresses per month.

b. continue to make 10 dresses per month.

c. make more than 10 dresses per month.

d. We do not have enough information with which to answer the question.

Answer:

make fewer than 10 dresses per month

Step-by-step explanation:

Note she already has s fixed marginal of $600 per dress, which makes a total marginal cost of $6000 ($600*10) for the month higher than her revenue.

However, to make at least a profit, if she reduces the number of the dresses to maximum of 8, her total marginal cost would be $4800 (600*8), which would result in a profit of $200 ($5000-$200).