Suppose that the market price of sugar is 25 cents per pound and a farmer's marginal cost of producing sugar is 28 cents per pound. The farmer should increase her sugar production.

Question

Quizplus · Accepted Answer

The farmer should not increase sugar production if the marginal cost of producing sugar exceeds the market price. In this case, the farmer's marginal cost is 28 cents per pound, which is higher than the market price of 25 cents per pound. Therefore, it would not be profitable for the farmer to increase sugar production.

Suppose That the Market Price of Sugar Is 25 Cents