When the Choice Variable Is a Continuous Variable, the Decision

question 96

Multiple Choice

When the choice variable is a continuous variable, the decision rule for an unconstrained maximization problem is:

• A) If MB > MC, increase the activity.
• B) If MB < MC, decrease the activity.
• C) Choose the activity so that MB = MC.
• D) all of the above
• E) none of the above

Analyze the impact of changes in scale on production costs and output.

Understand the concept of marginal cost and its relevance to production decisions.

Distinguish between fixed and variable costs.

Identify the relationships between output, cost, and profitability.

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