Reference no: EM131918312
HHD Inc has determined that its profit-maximizing quantity is 10,000 units per year. HHD earns $12,000 in revenue from the sale of those donuts. HHD has two costs. First, he pays $16,000 in annual rental payments for its five-year lease on its store. Second HHD incurs an additional cost of $5,000 for ingredients. HHD's variable cost is equal to.
$5,000, since ingredient is a variable input
$21,000 as it is a long run situation
$16,000, since rental payments are variable inputs that are paid every month
there is no variable cost in the short run
$1,000, because the firm will be able to only sustain at this level of variable cost.
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