Given a numeric production schedule, you will calculate profit and make decisions about short-run profitability to answer questions relating to your calculations.
Jerry's Lock Shop is a perfectly competitive firm, and Jerry is operating at his level of output, which maximizes profit. He can change locks for 20 different customers per day and charges each customer $35 for each lock. His total cost of changing locks is $800 and his fixed cost is $160.
a. What is Jerry's marginal cost?
b. Advise Jerry regarding his short-run decision to produce. Explain how you arrived at that answer.
c. Advise Jerry regarding his long-run decision to produce.