If the marginal cost of printing the textbook you are using for this course is just $3,then what is the most reasonable conclusion you can reach?

A) The publisher is making a profit of at least 1000 percent.
B) The publisher needs to print and sell thousands of copies in order to take advantage of economies of scale.
C) The publisher has very low fixed costs.
D) The publisher has very high variable costs.

Question

Colson Spicer · Accepted Answer

Final Answer : B, Explanation :  If the marginal cost of printing the textbook is only $3, it means that the variable costs of production are relatively low. However, this doesn't necessarily mean that the publisher is making a huge profit or has low fixed costs. The fact that the marginal cost is low suggests that the publisher could benefit from economies of scale, which means that they would need to print and sell a large number of copies in order to spread out their fixed costs and make a profit. Therefore, choice B is the most reasonable conclusion to reach.

Definitions

Learning Objectives

Learning Objectives

Related questions