Asked by Camila Ramirez on Jun 30, 2024
Verified
Food Fanatics caters meals where their cost for producing an extra meal is $20.Each of their meals is standard and sells for $25.At this rate what should the company do?
A) Produce more meals and increase their profit
B) Produce fewer meals and increase their profit
C) Not change production
D) None of the above
Standard Meals
Refers to set menu options in a food service establishment that are regularly available and usually priced at a fixed rate.
Producing
The act of creating, manufacturing, or generating goods or services.
Profit
The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.
- Analyze the impact of marginal costs and revenues on production decisions.
- Assess cost-benefit scenarios in business operations.
Verified Answer
MC
Mario CardenasJul 02, 2024
Final Answer :
A
Explanation :
Since the cost to produce an extra meal is only $20 and each meal sells for $25, the company should produce more meals in order to increase their profit. By producing and selling more meals, they will be able to take advantage of their low production cost and generate more revenue.
Learning Objectives
- Analyze the impact of marginal costs and revenues on production decisions.
- Assess cost-benefit scenarios in business operations.