Ricky's Donuts sells premium donuts. Premium donuts have toppings.The demand for premium (PR) donuts is: PPR = 5.70 - 0.45QPRThe marginal cost for each is:MCPR = 0.20Now Ricky starts selling cupcakes. This creates an opportunity cost of 0.10 per premiumdonut as the those toppings cannot be used for cupcakes.Which of the following statements is true?O The opportunity cost will increase fxed costsWith the opportunity cost, more premium donuts will be producedO The opportunity cost will increase profitO The opportunity cost will change the minimum average costO With the opportunity cost, Ricky should produce 9 premium donuts

Opportunity Cost is defined as the cost of the next best alternative or the cost that is forgone.…

Ricky's Donuts sells premium donuts. Premium donuts have toppings. The demand for premium (PR) donuts is: PpR = 5.70 - 0.45QPR. The marginal cost for each is: MCPR = 0.20 %3! Now Ricky starts selling cupcakes. This creates an opportunity cost of 0.10 per premium donut as the those toppings cannot be used for cupcakes.

Ricky's Donuts sells premium donuts. Premium donuts have toppings. The demand for premium (PR) donuts is: PpR = 5.70 - 0.45QPR. The marginal cost for each is: MCPR = 0.20 %3! Now Ricky starts selling cupcakes. This creates an opportunity cost of 0.10 per premium donut as the those toppings cannot be used for cupcakes.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Ricky's Donuts sells premium donuts. Premium donuts have toppings.
The demand for premium (PR) donuts is: PPR = 5.70 - 0.45QPR
The marginal cost for each is:
MCPR = 0.20
Now Ricky starts selling cupcakes. This creates an opportunity cost of 0.10 per premium
donut as the those toppings cannot be used for cupcakes.
Which of the following statements is true?
O The opportunity cost will increase fxed costs
With the opportunity cost, more premium donuts will be produced
O The opportunity cost will increase profit
O The opportunity cost will change the minimum average cost
O With the opportunity cost, Ricky should produce 9 premium donuts

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