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A business is currently producing a = 400 units of its product per month. Assume the following is true: Its costs are C(400) = 8500,
A business is currently producing a = 400 units of its product per month. Assume the following is true: Its costs are C(400) = 8500, and the marginal cost is MC(400) = 10. . Its revenues are R(400) = 8800, and the marginal revenue is MR(400) = 22. (a) (6 points) Which of the following statements is true when production is at q = 400 units? (List the letters of all that apply - you do not need to explain your answers.) (A) The business is operating at a loss (i.e. profit is negative). (B) Costs increase by about $10 each month. (C) Profits increase by about $12 each month. (D) An additional unit of production per month will increase costs. (E) An additional unit of production per month will increase revenue. (F) An additional unit of production per month will increase profit. (b) (6 points) Estimate how much profits will increase or decrease if production is changed from q = 400 to q = 410. Should the business increase production if it can? (c) (6 points) A tax of $1 per unit is enacted. Is the business still profitable? Estimate the new break-even point
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