Pamela is opening a pastry shop in which she will make and sell special birthdaycupcakes. She is trying to decide how many mixers to purchase. Her estimated fixedand average variable costs, if she purchases one, two, or three mixers, are shown inthe table. Assume that average variable costs do not vary with output. Suppose thatPamela is producing 100 cupcakes with one mixer, but she has a sudden increase indemand, so she begins to produce 200 cupcakes. Explain how her average total costwill change in the short run and in the long run. (Hint: Don't write more than 3sentences)Table: Cupcakes at Dessert DelightNumber of Fixed Costs Averagemixersvariablecost1$1,000$101,5002,50023

Total costs include fixed costs and variable costs. Total cost is divided by the total output…

Pamela is opening a pastry shop in which she will make and sell special birthc cupcakes. She is trying to decide how many mixers to purchase. Her estimate and average variable costs, if she purchases one, two, or three mixers, are sho the table. Assume that average variable costs do not vary with output. Suppo- Pamela is producing 100 cupcakes with one mixer, but she has a sudden incre demand, so she begins to produce 200 cupcakes. Explain how her average to- will change in the short run and in the long run. (Hint: Don't write more than sentences)

Pamela is opening a pastry shop in which she will make and sell special birthc cupcakes. She is trying to decide how many mixers to purchase. Her estimate and average variable costs, if she purchases one, two, or three mixers, are sho the table. Assume that average variable costs do not vary with output. Suppo- Pamela is producing 100 cupcakes with one mixer, but she has a sudden incre demand, so she begins to produce 200 cupcakes. Explain how her average to- will change in the short run and in the long run. (Hint: Don't write more than sentences)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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