Farmer John can produce as much corn as he wants at the going price of $48 per bushel.At his current production level,the marginal cost is $18.What should the company do?
A)Increase production
B)Decrease production
C)Stay at this level of production
D)None of the above

Question

​Farmer John can produce as much corn as he wants at the going price of $48 per bushel.At his current production level,the marginal cost is $18.What should the company do?
A)​Increase production
B)Decrease production
C)Stay at this level of production
D)​None of the above

Quizplus · Accepted Answer

Since the current production level has a marginal cost of $18, which is less than the market price of $48, each additional bushel of corn produced will generate a profit of $30. Thus, the company can increase its profits by producing more corn until the marginal cost equals the market price. Therefore, the best choice would be to increase production.

​Farmer John Can Produce as Much Corn as He Wants

Farmer John Can Produce as Much Corn as He Wants