A Competitive Firm Produces Identical Outputs at Two Different Plants

question 23

Multiple Choice

A competitive firm produces identical outputs at two different plants. If the marginal cost at the first plant is above market price and marginal cost at the second plant is less than market price, then to increase profit the firm should

• A)decrease output in both plants.
• B)increase output in both plants.
• C)increase output in the first plant and decrease it in the second plant.
• D)decrease output in the first plant and increase it in the second plant.

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Definitions:

Net Capital

The total value of a company’s or individual's assets minus liabilities, representing the owner's equity or net worth.

Desirable Investment

An investment opportunity deemed attractive due to factors like potential for high returns, stability, or alignment with the investor's financial goals and risk tolerance.

Exchange Rate

How much one currency is worth in terms of a different currency.

Net Capital

The difference between a company's total assets minus its total liabilities, indicating its overall financial health and stability.