-Assume the Firm in Figure 11-2 Is Currently Producing 13

question 162

Multiple Choice

-Assume the firm in Figure 11-2 is currently producing 13 units of output and charging $380 each.The firm

• A)will increase its profit if it raises its price and reduces its production level
• B)will increase its profit if it lowers its price and expands its production level
• C)cannot increase economic profit by changing its price and output since it is already maximizing its profit
• D)will increase its profit if it raises its price and expands its production level
• E)will increase its profit by lowering its price and reducing its production level

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Definitions:

Variable Operating Costs

Costs that fluctuate with the level of production or sales volume, such as materials and labor.

Labor Hour

A measurement of work output or productivity calculated as the amount of labor input in terms of hours expended.

Time and Materials Pricing

A pricing strategy where the customer pays for the time spent on a project and the materials used, commonly used in service and contracting industries.

Variable Costs

Expenses that fluctuate in direct proportion to changes in the level of business activity or production volume, such as raw materials and direct labor.