Asked by
Anthony Thomas
on Dec 12, 2024
Verified
If a price searcher is producing at a level of output such that its marginal cost is $16 and its marginal revenue is $9, the firm should
A) increase output in order to reduce per-unit costs.
B) decrease the price of its product and expand output.
C) increase price and reduce its rate of output.
D) reduce both price and output.
Marginal Cost
The rise in overall expenses associated with the production of an extra unit of a good or service.
Marginal Revenue
Marginal revenue is the additional income that is gained from selling one more unit of a product or service.
Price Searcher
A firm that determines the price of its products with some degree of market power, usually by differentiating its products from those of competitors.
- Clarify the importance of marginal cost and marginal revenue in the pursuit of maximal profits by firms that engage in price discovery.
Verified Answer
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Learning Objectives
- Clarify the importance of marginal cost and marginal revenue in the pursuit of maximal profits by firms that engage in price discovery.