If the marginal revenue of the next unit a firm produces is $50 and its marginal cost is $35, a firm should:
A. increase production.
B. reconsider past production decisions.
C. decrease production.
D. hold production constant.
Answer: A
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Which of the following statements about production isoquants is correct?
A) They show all the combinations of two inputs that result in the same level of output. B) They are usually concave to the origin. C) They show all the combinations of two inputs that yield the same cost of production. D) They represent lower levels of output the farther they are from the origin.
The marginal rate of technical substitution shows
A) how many machines can be replaced by computers, keeping output constant. B) how many computers are needed to replace workers so that output can increase. C) the rate at which technology advances change marginal productivity. D) how many workers can do the job of one computer, keeping output constant.