Answer to Question #149847 in Microeconomics for Victoria

Question

If HomeDeliv is presently making 504 deliveries and the price of a delivery is $10, should HomeDeliv increase deliveries to 505? Explain.

Answer 1

Yes, HomeDeliv should increase deliveries to 505. This is because the cost of delivery realistically cannot be more than the cost of item as well as the profit gained back. Therefore, an increase in number of deliveries will impact positively the HomeDeliv profit margin.