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[answered] A firm making fortune cookies produces where marginal reven


A firm making fortune cookies produces where marginal revenue equals marginal cost. The result is total revenue of $11,000, fixed costs of $5,000 and variable costs of $8,000. What should the fortune cookie producing firm do in the short-run?


A.

Shut down production, thereby reducing losses from $13,000 to $5,000.

B.

Shut down production, thereby avoiding costs of $8,000 and making a profit of $6,000.

C.

Continue production, since a loss of $2,000 is better than a loss of $5,000.

D.

Cut back production to reduce variable costs to $6,000 and break even.

E.

Continue production, thus making a profit of $3,000.


Pick answer and explain why

 


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