Suppose,at Its Current Output Level,a Firm's Marginal Profit Is Positive

question 46

Multiple Choice

Suppose,at its current output level,a firm's marginal profit is positive.Therefore,to maximize profit,it should:

• A)decrease output until marginal profit is zero.
• B)increase output because marginal revenue [MR] is less than marginal cost [MC].
• C)increase both its output and its price.
• D)increase output because MR is greater than MC.
• E)increase output until it is producing at full capacity.

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Definitions:

Principle Agency Problem

A situation in corporate governance where the interests of principals (owners) diverge from those of agents (managers), leading to potential conflicts.

Incentive

A benefit or reward intended to motivate or encourage a specific action or behavior in economic or organizational contexts.

Decision Maker

An individual or entity responsible for making choices that will impact outcomes in a business, policy, or personal context.

Agency Costs

Expenses arising from the conflict of interest between a company's management and its shareholders.