Sarah should continue to expand output as long as price is at least as great as marginal cost. The marginal cost of each of the first 3 wedding cakes is less than $95, but the marginal cost of the 4th wedding cake is $100. Since $100 is greater than $95, Sarah will only produce 3 wedding cakes per day. [Note that at 3 wedding cakes per day, Sarah’s total revenue ($285) is sufficient to cover her variable cost ($200 = $300 - $100), so she will not shut down.]