Table 14-3 Use the Information for a Competitive Firm in the Table

question 33

Multiple Choice

Table 14-3
Use the information for a competitive firm in the table below to answer the following questions.

-Refer to Table 14-3.If the firm finds that its marginal cost is $11,it should

• A)increase production to maximize profit.
• B)increase the price of the product to maximize profit.
• C)advertise to attract additional buyers to maximize profit.
• D)reduce production to increase profit.

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Definitions:

Production Costs

The total expense incurred in the manufacture of a product, including labor, materials, and overhead.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overhead, payroll, taxation, and interest payments.

Net Profit

The remaining income after all expenses, taxes, and costs have been subtracted from total revenue.

Value Chain

A series of activities by a firm that adds value to its products or services from conception to delivery.