Raiman's Shoe Repair produces custom-made shoes.When Mr.Raiman produces 12 pairs per week,the marginal cost of the twelfth pair is $84,and the marginal revenue of the twelfth pair is $70.What would you advise Mr.Raiman to do?

Question

Quizplus · Accepted Answer

The marginal cost of the twelfth pair ($84) is greater than the marginal revenue of the twelfth pair ($70), which means that producing the twelfth pair actually leads to a loss. This suggests that Mr. Raiman is experiencing decreasing marginal returns and he should produce fewer custom-made shoes to reduce costs and increase profits. Therefore, producing fewer custom-made shoes is the best choice.

Raiman's Shoe Repair Produces Custom-Made Shoes