Suppose the Ding-Dong Doorbell Co

question 92

Multiple Choice

Suppose the Ding-Dong Doorbell Co., a monopoly, finds that at current production levels marginal revenue is $15 while marginal cost is $10. This company should:

• A) make no change in present production level.
• B) without further information on average production cost there is no way to determine what actions the company should take.
• C) decrease production, as this will allow price and marginal revenue to increase, thereby increasing profits.
• D) increase output as this will result in higher profits.

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Definitions:

Control Circuit

An electrical circuit designed to control the operation of devices in a system, often using low power signals to operate switches or relays controlling higher power circuits.

Pressure Tank Switch

A switch mechanism that activates or deactivates based on the pressure level within a storage tank.

Pilot Device

Manual controls like switches or buttons used to operate electrical equipment indirectly.