Question

toot sweets bakery sells freshly baked muffins from 6.30 am at $1.20 per muffin. by 4 pm, the remaining muffins are marked down to $0.60 each. which of the following statements is true?

Answer 1

The truth is that Toot Sweets is making an effort to cut down on its loss.

What is loss minimization?

A company that has a short-term economic loss that is lower than its total fixed costs is subject to the loss minimization rule. This happens when the price paid is higher than average variable costs but lower than average overall costs. Given manufacturing costs and market conditions, it is more of an alternative than an absolute rule that any corporation looking to maximize profits is likely to pursue.

If a firm's pricing is higher than its average variable cost but lower than its average total cost, it is assumed that the firm is completely competitive and will generate the amount of output that minimizes financial losses.

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