What might cause a firm to want to increase production past the point where additional revenues offset additional costs?
A)The firm is enjoying the benefits of the learning curve
B)Future production costs will be higher
C)Managers are being rewarded on the basis of short-run profits
D)The firm relies on direct growth incentives
E)The firm wants to violate the rule of equating marginal revenue equal to marginal cost

Question

Quizplus · Accepted Answer

When a firm is enjoying the benefits of the learning curve, it may increase production because the cost per unit decreases as production experience increases, potentially leading to higher long-term profitability even if short-term costs exceed revenues.

What Might Cause a Firm to Want to Increase Production