Thomas Edison Once Complained That He Was Not Making a Profit

question 68

Multiple Choice

Thomas Edison once complained that he was not making a profit selling light bulbs because his plants were operating 25 percent below capacity.He estimated that he could increase output 25 percent with a 2 percent increase in the cost of production.He sold the 25 percent on the foreign market at a price below what he called the "cost of production." We can deduce that Edison really meant

• A)Marginal cost was below average cost but less than marginal revenue.
• B)Average cost exceeded variable cost, which exceeded marginal revenue.
• C)Variable cost exceeded fixed cost but was less than marginal revenue.
• D)Marginal cost was above average cost but greater than marginal revenue.