If a Profit-Maximizing Firm, with an Increasing Average Cost Curve

question 28

Multiple Choice

If a profit-maximizing firm, with an increasing average cost curve, finds that it is producing a level of output at which marginal costs are $100, while marginal revenue is $5, what action should it take?

• A)Raise output.
• B)Lower prices.
• C)Declare bankruptcy.
• D)Decrease output.
• E)None of the above.

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Definitions:

Variable Interval

Variable Interval in the context of psychology, refers to a schedule of reinforcement where rewards are given after unpredictable time durations, promoting steady responses.

Reinforcement Schedule

A plan or rule set for determining the frequency and timing of delivering reinforcements in behavior modification.

Average

typically refers to the mathematical mean or midpoint in a set of numbers or the normal standard or condition.

Performance

Conducting or fulfilling an action, task, or function.