Question

Jennifer's Bakery Shop produces baked goods in a perfectly competitive market. If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120. She can sell this batch of cookies at a market price of $110. To maximize her profit, Jennifer should produce this batch of cookies because their MR exceeds their MC. shut down. produce this batch of cookies because they will help lower her average fixed cost. not produce this additional batch. charge $120 for this batch.

Answer 1

Option D. Not produce this additional batch.

Step-by-step explanation:

The reason is that the marginal revenue generated from the addtional production of unit has fallen below marginal cost which means there is no value in generating additional units. So the right course of action would be not generating that additional batch.