Asked by
Michael Reyes
on Dec 11, 2024
Verified
For a certain firm, the 100th unit of output that the firm produces has marginal revenue equal to $10 and a marginal cost of $7. It follows that
A) the production of the 100th unit of output increases the firm's profit by $3.
B) the production of the 100th unit of output increases the firm's average total cost by $7.
C) the firm's profit-maximizing level of output is less than 100 units.
D) the production of the 110th unit of output must increase the firm's profit by less than $3.
Marginal Cost
The price of creating an additional unit of a product or service.
Profit-Maximizing
The process or strategy aimed at achieving the highest possible profit from activities, considering both revenue and costs.
- Explain how marginal revenue and marginal cost influence a firm's production decisions to maximize profit.
Verified Answer
TT
Learning Objectives
- Explain how marginal revenue and marginal cost influence a firm's production decisions to maximize profit.