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?