Suppose the cost of insecticide (a variable input)decreases for broccoli farmers.In order to maximize profits,ceteris paribus,broccoli farmers should
A)Decrease output.
B)Keep output the same since the market price did not change.
C)Increase output.

Question

Quizplus · Accepted Answer

When the cost of insecticide decreases, broccoli farmers can produce at a lower cost. This will increase their profit margins and they should want to take advantage of this by increasing output. At the same market price, they can now produce more broccoli at a lower cost and earn higher profits. Therefore, the best choice is to increase output.

Suppose the Cost of Insecticide (A Variable Input)decreases for Broccoli