Big Green Company Is Considering Introducing a New Product to Replace

question 23

Multiple Choice

Big Green Company is considering introducing a new product to replace an existing product.The new product would result in increased revenues,but slightly lower overall profits because the product will cause injury to a few users and Big Green will compensate persons who are injured.The introduction of this product would be the proper decision under:

• A) both the moral minimum theory and the profit maximization theory.
• B) neither the moral minimum theory nor the profit maximization theory.
• C) the moral minimum theory, but not under the profit maximization theory.
• D) the profit maximization theory, but not under the moral minimum theory.
• E) the moral maximum theory, but not under the moral minimum theory.

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Definitions:

Natural Monopolies

Situations where a single firm can supply a good or service to an entire market at a lower cost than could multiple firms.

ATC

Average Total Cost, which is the sum of all production costs divided by the quantity of output produced, incorporating both fixed and variable costs.

Agricultural Products

Goods derived from farming and agriculture, including crops and livestock.

Monopolist

An individual or company that holds exclusive control over the supply or trade of a particular good or service, allowing them to influence prices and market conditions.