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The Metal Shop produces 1.7 million metal fasteners a year for industrial use. At this...

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Finance

The Metal Shop produces 1.7 million metal fasteners a year for industrial use. At this level of production, its total fixed costs are $486,000 and its total costs are $791,000. 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 $.165. 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: No; The offered price is less than the marginal cost.

D: Yes; The offered price is greater than the marginal cost.

E: No; The offered price is greater than the marginal cost.

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