The market price for wallets is $20. Your technology is such that at your most efficient production point, the average total cost of producing a wallet is $2.50. Your manager runs into your office and shouts, "Boss Average costs are rising!!" To make a profit-maximizing decision, you should:

By asking the manager about the marginal cost.

Explanation:

When a business wants to  make profit it decides the production level that gives maximum revenue at lowest cost. that is, the business maximize profit and maximize revenue at a  lower cost.

The manager should ask for the marginal cost of production, since t there will be  a rise in average cost

A marginal cost can be defined as  the extra cost incurred for producing an extra unit of a product.

To achieve maximize profit the manager needs to get a production level at which marginal cost is lowest at highest revenue,

Maximum profit = marginal cost (lowest at highest revenue)

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