Hannah's Harmonicas sells 1,000 harmonicas each month at a price of $10.00 each.(She could sell as many as she wishes at that price. )If the marginal cost of producing an additional harmonica is $9.60,then
A)Hannah should produce additional harmonicas
B)Hannah could possibly reduce her profits by producing one additional harmonica
C)Hannah must currently be maximizing her profits
D)too many harmonicas are being produced,from society's point of view
E)Hannah's total economic profit is $400 per month

Question

Quizplus · Accepted Answer

Since the price per harmonica ($10.00) is greater than the marginal cost of producing an additional harmonica ($9.60), Hannah will make an additional profit of $0.40 for each harmonica produced and sold. Therefore, producing additional harmonicas will increase her profits.

Hannah's Harmonicas Sells 1,000 Harmonicas Each Month at a Price