If Bianca advertises, will her average total cost increase or decrease at the quantity produced? Bianca bakes
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Bianca bakes delicious cookies. Her total fixed cost is $40 a day, and her average variable cost is $1 a bag. Few people know about Bianca’s Cookies, and she is maximizing her profit by selling 10 bags a day for $5 a bag. Bianca thinks that if she spends $50 a day on advertising, she can increase her market share and sell 25 bags a day for $5 a bag.
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Before she advertised Biancas total variable cost wa...View the full answer
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Ali Khawaja
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