For a Certain Firm, the 100th Unit of Output That

question 358

Multiple Choice

For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $7 and a marginal cost of $10. It follows that the

• A)production of the 100th unit of output increases the firm's profit by $3.
• B)production of the 100th unit of output increases the firm's average total cost by $7.
• C)firm's profit-maximizing level of output is less than 100 units.
• D)production of the101st unit of output must increase the firm's profit by more than $3.

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Definitions:

Post Hoc Fallacy

A logical error where one assumes that since event A happened before event B, A must have caused B.

Correlation Problem

Issues arising from attempts to interpret or infer causality from purely correlational data without establishing a clear causal relationship.

Causation

The relationship between cause and effect, where one event (the cause) directly results in another event (the effect).

Economic Activity

Any action that involves the production, distribution, and consumption of goods and services within an economy.