Suppose You Are Deciding Whether or Not to Increase Production

question 82

Multiple Choice

Suppose you are deciding whether or not to increase production. You are currently making a profit. If you produce one more unit your increase in cost will be $10, your average variable costs will increase to less than that and your average fixed costs will decrease. Finally, your average revenue will increase to $12, but your increase in revenue will be $14. You should

• A)Increase production by at least 1 unit.
• B)Increase production by exactly 1 unit.
• C)Leave production unchanged, profit is maximized where you are.
• D)Redo the math associated with decreasing production because that may result in greater profit.

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Definitions:

Psychoactive Effects

Changes in mood, perception, or behaviour induced by substances that affect the central nervous system.

Substance

Material or matter; in contexts like drug use, it refers to drugs or alcohol consumed by a person.

Synthesized Product

A product that is created by chemical synthesis, especially one that is artificially produced in a laboratory or industrial setting.

Abstain

To deliberately choose not to partake in a certain behavior or indulgence, often related to substances like alcohol or drugs.