Question

You produce t-shirts that have a marginal cost of $5. this means that at a price of $5 you will _____. earn profits cover your costs lose money

Answer 1

cover your costs because if you sell a product at five dollars but it takes you five dollars to make, you have a net revenue of zero dollars

Answer 2

Marginal cost is the change in the total cost of a production run for making one additional unit of an item. If you produce T-shirts that have a marginal cost of $5 this means that at a price of $5 you will cover your costs. In order to earn profit the price must be higher than the marginal cost. If the price is lower, you will lose money.