Asked by AZALEA RODRIGUEZ on May 05, 2024
Verified
A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the unit for $6. The firm should produce more than 100 units in order to maximize its profits (or minimize its losses).
Minimize Losses
The strategy or process of reducing the amount of losses incurred by a business, investment, or action as much as possible.
- Identify the methods by which companies in competitive sectors ascertain the level of production that maximizes profits.
- Understand the technique of enhancing profits by utilizing marginal analysis in competitive arenas.
Verified Answer
ZS
Zainab SaeedMay 09, 2024
Final Answer :
True
Explanation :
Producing the 100th unit adds more to revenue ($6) than to costs ($5), indicating that the marginal revenue exceeds the marginal cost at this level of output, suggesting that increasing production could lead to higher profits.
Learning Objectives
- Identify the methods by which companies in competitive sectors ascertain the level of production that maximizes profits.
- Understand the technique of enhancing profits by utilizing marginal analysis in competitive arenas.