Calvin is a custom picture framer. His total fixed cost is $110 a day, and his average variable cost is $1 a frame. He is maximizing his profit by selling 22 picture frames a day for $6 a frame. Few people know about Calvin's Framery. Calvin thinks that if he spends $10 a day on advertising, he can increase his market and sell 44 picture frames a day for $6 a frame. If Calvin's belief about the effect of advertising is correct, he

Question

Accepted Answer

can increase his economic profit by advertising.

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cannot increase his economic profit by advertising because advertising increases his average total cost.

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can increase his economic profit by advertising only if he can lower his total variable cost.

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can increase his economic profit by advertising only if he raises the price of a picture frame.

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cannot increase his economic profit by advertising because advertising increases his total cost.

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Calvin is a custom picture framer. His total fixed cost is $110 a day, and his a...

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