Micro Enterprises Has the Capacity to Produce 10,000 Widgets a Month

Multiple Choice

Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each. Assuming the same story, but Coyote's offer is for 1,500 units (all or nothing) , should the offer be accepted?

A) No, because it will lose $1 per unit
B) No, because the opportunity costs outweigh the gains
C) No, (indifferent or worse) because the opportunity costs equal the gains
D) Yes, because it makes $1 per unit in the short run
E) Unable to determine