The Hound Dog Bus Company contemplates expanding its Virginia operations by offe

Question

The Hound Dog Bus Company contemplates expanding its Virginia operations by offering service from Fairfax to Arlington. The total cost of the trip would be $120, of which $50 is fixed cost, which it has already paid. The firm expects to earn $60 in revenue from the trip. The Hound Dog Bus Company should

Offer this service because it will earn a positive economic profit

Not offer this service because the total revenue is less than the variable

costs

Offer this service because the revenue exceeds fixed cost

Not offer this service because the total cost exceeds the total revenue

Explanation / Answer

The correct choice is :- Not offer this service because the total cost exceeds the total revenue

Explanation:- The total cost is $ 120 whereas the total revenue is $ 60 and by operating this service, the firm would incur a loss of $ 60

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.