Which of the following is true
A)Increasing output always leads to increase in profits
B)Increasing outputs increase profits if price is above marginal cost
C)Increasing output increases profits if price is lea than marginal costs
D)Increasing output always decreases profits

Question

​Which of the following is true
A)​Increasing output always leads to increase in profits
B)Increasing outputs increase profits if price is above marginal cost
C)Increasing output increases profits if price is lea than marginal costs
D)​Increasing output always decreases profits

Quizplus · Accepted Answer

According to the basic principle of profit maximization, increasing output increases profits only if the price is above the marginal cost. This is because the marginal cost represents the additional cost of producing one additional unit, and if the price is below that cost, producing more units will result in losses rather than profits. Therefore, option B is the correct answer. Options A, C, and D are incorrect because they make generalized statements that do not take into account the relationship between price and marginal cost.

​Which of the Following Is True

Which of the Following Is True