The Bumpy Ride Suspension Company Makes Springs for Bicycle Seats

Multiple Choice

The Bumpy Ride Suspension company makes springs for bicycle seats. Currently thes prings sell for $5 each. Being profit maximizers, the company makes just enough springs so that the marginal cost of the last spring produced is $5. Their average total cost at that output is $3.50. If they currently produce 1,000 springs and the market price falls by $1, approximately how much profit will be lost?

A) all of the profit will be lost
B) profit will fall by $1 per spring
C) there will be no loss of profit
D) more than $1,000 but less than $1,500
E) less than $1,000