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Compute for the average total cost

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1. Biancabakes delicious cookies. Her total fixed cost is P4000 a day, and her average variable cost is P10 a bag. Few people know about Bianca's Cookies, and she maximizes her profit by selling 100 bags a day for P50 a bag. Bianca thinks that if she spends P5000 a day on advertising, she will sell 250 bags a day for P50 a bag.

Compute and compare her profit with and withoutadvertising. If Bianca's belies about the effect of advertising is correct, can she increase her profit by advertising?

Sales
Costs
Profits

Compute for the average total cost with and without advertising. If Bianca advertises, will her average totla cost increase or decrease at the quantity produced?

Reference no: EM132727803

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