A Firm Is Producing a Joint Product, Product a and Product

question 121

Multiple Choice

A firm is producing a joint product, Product A and Product B, with variable proportions. At its current production levels, the marginal benefit of producing Product A is $3 and the marginal cost is $2 and the marginal benefit of producing Product B is $4 and the marginal cost is $5. To maximize profits, the managers of the firm should produce ______of Product A and______ of Product B.

• A)less; less
• B)less; more
• C)more; more
• D)more; less

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Definitions:

Yield To Maturity

The total return anticipated on a bond if it is held until the date it matures, including both interest payments and the gain or loss realized on the principal amount.

Market Price

The current exchange rate for a service or asset in the open market.

Zero-Coupon Bonds

Bonds that do not pay periodic interest and are sold at a discount from their face value, with the full face value being repaid at maturity.

Yield To Maturity

The total return anticipated on a bond if it is held until the date of its maturity, expressed as an annual rate.