The Table Given Below Reports the Marginal Revenue and Marginal

question 81

Multiple Choice

The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client. Table 8.2
Refer to Table 8.1.If we assume that Holmes is currently serving 8 clients, then Holmes Agency:

• A)is maximizing profit.
• B)should find more clients to increase profits.
• C)is maximizing total revenue.
• D)could increase profits by serving less clients.
• E)is minimizing cost.

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Definitions:

Administrative Expenses

Costs associated with the general management and administration of a business, such as salaries of executive personnel, legal and accounting fees.

Operating Capacity

The maximum output that a company can produce under normal conditions over a specific period.

Differential Cost

Differential cost, also known as incremental cost, is the difference in total cost that will result from selecting one option over another in decision-making processes.

Unused Capacity

Represents the available production or service facility capability that is not being utilized to its full potential.