A Firm with Two Factories,one in Michigan and One in Texas,has

question 62

Multiple Choice

A firm with two factories,one in Michigan and one in Texas,has decided that it should produce a total of 500 units of output in order to maximize profit.The firm is currently producing 200 units in the Michigan factory and 300 units in the Texas factory. At this allocation between plants,the last unit of output produced in Michigan added $5 to total cost,while the last unit of output produced in Texas added $3 to total cost.If the firm produces 201 units in Michigan and 299 units in Texas instead:

• A)total cost will decrease $2
• B)profit will increase $2
• C)total cost will decrease $3
• D)both a and b
• E)none of the above

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Definitions:

Annual Payments

Regular payments made once a year, often referred to in the context of loans, annuities, or insurance policies.

Interest Rate

The percentage charged on a loan or paid on an investment over a specific period of time, often annually.

Equal Dollar Amounts

Situations where monetary values, contributions, or distributions are the same in magnitude.

Annuity Contract

A financial product sold by financial institutions that provides a series of payments in exchange for an initial payment.