The Metal Shop produces 2.1 million metal fasteners a year for industrial use. At this level of production, its total fixed costs are $320,000 and its total costs are $522,000. The firm can increase its production by 5 percent, without increasing either its total fixed costs or its variable costs per unit. A customer has made a one-time offer for an additional 50,000 units at a price per unit of $0.08. Should the firm sell the additional units at the offered price? Why or why not? a. Yes. The offered price is less than the marginal cost. b. Yes. The offered price is equal to the marginal cost. c. Yes. The offered price is greater than the marginal cost. d. No. The offered price is less than the marginal cost. e. No. The offered price is greater than the marginal cost.
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