If a manager is unsure what the entire profit function looks like, then she can
A)decrease output slightly to see if profits increase.
B)increase output slightly to see if profits increase.
C)Both A and B.
D)None of the above.

Question

Quizplus · Accepted Answer

By decreasing output slightly, the manager can see if profits increase, which would indicate that they were operating on the upward-sloping part of the profit function. Similarly, by increasing output slightly, the manager can see if profits increase, which would indicate that they were operating on the downward-sloping part of the profit function. By testing both, the manager can get a better sense of the shape of the profit function and make more informed decisions about how to maximize profits.

If a Manager Is Unsure What the Entire Profit Function