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21 September, 17:37

Laura is a gourmet chef who runs a small catering business in a competitive industry. laura specializes in making wedding cakes. laura sells 20 wedding cakes per month. her monthly total revenue is $5,000 and her average variable costs are $180. the marginal cost of making a wedding cake is $200. in order to maximize profits, laura should:

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  1. 21 September, 19:48
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    Laura should both reduce her variable costs and increase her total revenue. If she charged 10% more ($275 instead of $250) and reduced her variable costs by 10% ($162 instead of $180), she would nearly double her profits. She would profit $93 per cake compared to her current $50.
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Home » Business » Laura is a gourmet chef who runs a small catering business in a competitive industry. laura specializes in making wedding cakes. laura sells 20 wedding cakes per month. her monthly total revenue is $5,000 and her average variable costs are $180.
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