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Brewsters, a ice cream company, has been fairly successful in its market. Lydia sees an opportunity for profit and enters the market. After producing her profit-maximizing level of output, she finds that her average total cost per unit is $5, her average variable cost per unit is $3, and the market price is $2.50. In the short run, Lydia should Choose one: A. expand production because she is making a positive economic profit.

Respuesta :

Answer:

A. shut down her business.

Explanation:

Given that

The average overall cost per unit is $5

The average variable cost per unit is $3

And, the market price per unit is $2.50

Based on the above information

In the short run, the lydia should shut down her business as the total cost is more than the market price due to which the company is suffering the loss instead of the profit

Therefore the correct option is a.

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