Problem
Wendy's Window Cleaning is a small local operation. Winnie presently cleans the outside windows in her neighbours' houses for $36 per house. She does ten houses per day. She is incurring total costs of $420, and of this amount $100 is fixed. The cost per house is constant.
(a) What is the marginal cost associated with cleaning the windows of one house - we know it is constant?
(b) At a price of $36, what is her break-even level of output (number of houses)?
(c) If the fixed cost is ‘sunk' and she cannot increase her output in the short run, should she shut down?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.