Leugers Custom Cabinetmakers is currently operating at a profit while producing four custom cabinets per week.At that output level,marginal cost exceeds marginal revenue.In order to maximize profit,Leugers should
A)decrease output
B)increase output
C)leave output at four cabinets per week
D)either increase or decrease output,depending on its level of fixed costs
E)either increase or decrease output,depending on its level of variable costs

Question

Quizplus · Accepted Answer

Since Leugers Custom Cabinetmakers is currently operating at a profit but experiencing a situation where marginal cost exceeds marginal revenue, it would be best to reduce output to increase profitability. This is because at the current output level, the cost of producing an additional cabinet exceeds the revenue received from selling one additional cabinet. By decreasing output, Leugers can reduce costs and increase profitability. Therefore, choice A is the best option.

Leugers Custom Cabinetmakers Is Currently Operating at a Profit While