Marginal Cost And Profitability
Sarah owns a factory that manufactures tin cans. A buyer places a temporary, one-month order for twice the usual quantity of cans. Which of the following best explains why Sarah might decline this order?
A
Fulfilling the order might increase her marginal costs beyond the point of profitability.
B
To increase production, she will need to purchase additional materials, which will increase her total costs.
C
To increase production, she will need to purchase additional materials, which will increase her average costs.
D
To increase production, she will need to raise factory wages, which will increase both her total and average costs.
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