Asked by
candy johnson
on Dec 01, 2024
Verified
If the short-run marginal costs of producing a good are $40 for the first 200 units and $50 for each additional unit beyond 200, then in the short run, if the market price of output is $46, a profit-maximizing firm will
A) produce a level of output where marginal revenue equals marginal costs.
B) produce as much output as possible since there are constant returns to scale.
C) produce up to the point where average costs equal $46.
D) not produce at all, since marginal costs are increasing.
E) produce exactly 200 units.
Short-Run Marginal Costs
The increase in total cost that arises from producing one additional unit of output when some inputs are considered fixed in the short term.
Market Price
The current price at which a good or service can be bought or sold on the open market, determined by supply and demand forces.
Profit-Maximizing Firm
A company that operates with the objective of making the highest possible profit.
- Understand thoroughly the methodology for maximizing profits in different business conditions.
- Identify the distinctions between immediate and extended period costs, along with their impact on production amounts.
Verified Answer
JB
Learning Objectives
- Understand thoroughly the methodology for maximizing profits in different business conditions.
- Identify the distinctions between immediate and extended period costs, along with their impact on production amounts.