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25 August, 15:53

The Taste Freeze Ice Cream Company is a perfectly competitive firm producing where MR = MC. The current market price of an ice cream sandwich is $5.00. Taste Freeze sells 200 ice cream sandwiches. Its AVC is $4.00 and its AFC is $3.00. What should Taste Freeze do?

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  1. 25 August, 19:28
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    Taste Freeze should Shut down production so that AVC will decrease.

    Explanation:

    Taste Freeze should Shut down and produce zero sandwiches because price is less than AVC.

    Therefore, Taste Freeze should Shut down production so that AVC will decrease.
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