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:

Groundwater

Groundwater is the water present beneath Earth's surface in soil pore spaces and in the fractures of rock formations.

Water Table

The level below the Earth's surface where the ground is completely saturated with water, marking the boundary between the unsaturated soil above and the saturated zone below.

Permeable Rock

Rock that allows water to pass through it due to the presence of spaces, or pores, within its structure.

Unconformity

A surface of contact between two groups of unconformable strata, indicating a period of erosion or non-deposition between successive strata.