Asked by Ouita Weeden-Dawson on Apr 25, 2024
Verified
Owners of a parking lot are deciding whether or not to add more parking spaces to the lot.The owners should increase parking spaces as long as:
A) LRMR=LRMC
B) LRMR>LRMC
C) LRMR<LRMC
D) None of the above
LRMC
Long-Run Marginal Cost, which is the increase in cost a company faces to produce one additional unit of output when all factors of production are variable.
- Comprehend pricing tactics in scenarios limited by capacity, including methods to optimize revenue.
Verified Answer
MQ
Muzammil Qureshi7 days ago
Final Answer :
B
Explanation :
If LRMR (Marginal Revenue of an additional parking space) is greater than LRMC (Marginal Cost of adding an additional parking space), the owners should add more parking spaces. This is because the revenue gained from renting out the additional parking spaces will be greater than the cost of adding them. Therefore, option B is the best choice.
Learning Objectives
- Comprehend pricing tactics in scenarios limited by capacity, including methods to optimize revenue.