Refer to the Accompanying Figure to Answer the Following Questions

question 160

Multiple Choice

Refer to the accompanying figure to answer the following questions.

-If a firm is producing a quantity of 150 and charging a price of $13,it

• A) should continue to produce 150 units but lower the price to $10 to maximize profits.
• B) should continue to produce 150 units but raise the price to $25 to maximize profits.
• C) should lower production to 100 units but keep charging $13 to maximize profits.
• D) should lower production to 100 units and raise the price to $25 to maximize profits.
• E) is already maximizing profits and should not change the price or quantity produced.

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Definitions:

Marginal Productivity

The additional output that is produced by employing one more unit of a particular input, holding other inputs constant.

Income Distribution

The way in which total income is shared among the population or different groups within society.

Substitute Factor

A factor or input that can be used in place of another to produce a good or service.

Factor Production

Refers to the inputs or resources used in the process of producing goods and services, including land, labor, capital, and entrepreneurship.