The Firm Maximizes Profits by ________

question 71

Multiple Choice

The firm maximizes profits by ________.

• A) shutting down
• B) producing 11 units of output
• C) producing 40 units of output
• D) producing 80 units of output

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Definitions:

MRP

Material Requirements Planning (MRP) is a system for planning production, scheduling activities, and controlling inventory used in overseeing manufacturing operations.

MPP

Marginal Physical Product, the additional output resulting from the use of one more unit of a variable input, holding all other inputs constant.

MRP

Marginal Revenue Product; the additional revenue generated from employing one more unit of a resource or factor of production.

Substitution Effect

The change in demand for a good or service that occurs when its price increases or decreases, leading consumers to substitute it with other goods or services that are relatively more or less expensive.