The Decision Rule on Whether to Sell or Process Further

question 96

Multiple Choice

The decision rule on whether to sell or process further

• A) varies from situation to situation.
• B) is process further as long as total revenue exceeds present revenues.
• C) is process further if incremental revenue from such processing exceeds incremental fixed costs.
• D) is process further if incremental revenue from such processing exceeds the incremental processing costs.

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Definitions:

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing for full adjustment to changes.

Short Run

In economics, a period during which at least one of a firm's inputs is fixed and cannot be changed.

Fixed Input

An input in the production process that cannot be changed in the short term, such as buildings or land.

Long-Run Adjustment

A process in which firms adjust their inputs and outputs to achieve the optimal level of production and efficiency over an extended period.