If the Short-Run Marginal Costs of Producing a Good Are

question 48

Multiple Choice

If the short-run marginal costs of producing a good are $40 for the first 200 units and $50 for each additional unit beyond 200, then in the short run, if the market price of output is $46, a profit-maximizing firm will

• A)produce a level of output where marginal revenue equals marginal costs.
• B)produce as much output as possible since there are constant returns to scale.
• C)produce up to the point where average costs equal $46.
• D)not produce at all, since marginal costs are increasing.
• E)produce exactly 200 units.

---

Definitions:

Marginal Benefit

The further utility or pleasure gained from consuming one additional unit of a good or service.

Creative Destruction

A concept in economics introduced by Joseph Schumpeter, describing the process by which old industries or technologies are destroyed and replaced by new ones.

"Destroyed" Industries

Refers to industries that have significantly declined or been rendered obsolete due to technological advancements, market shifts, or regulatory changes.

"Created" Industries

Sectors or markets that have emerged as a result of innovation, technological advances, or governmental policy.