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Abe grows beautiful orchids. His total fixed cost is $150 a day, and his average variable cost is $2 a plant. Few people know about
Abe grows beautiful orchids. His total fixed cost is $150 a day, and his average variable cost is $2 a plant. Few people know about Abe's Orchids and he is maximizing his profit by selling 25 orchids a day for $8 a plant. Abe thinks that if he spends $10 a day on advertising, he can increase his market and sell 43 orchids a day for $8 a plant. If Abe's advertising works as he expects, can he increase his economic profit by advertising? Abe's belief about the effect of advertising is correct, he _______. A. can increase his economic profit from zero to $98 B. cannot increase his economic profit by advertising because advertising increases his average total cost C. cannot increase his economic profit by advertising because advertising increases his total cost D. can increase his economic profit by advertising only if he raises the price of an orchid
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