The marginal cost of catching a fish is the same as the average total cost at your currentlevel of 3,000 fish. If the price you receive for fish is greater than the marginal cost of the3,000th fish, you should
A) add another boat to your fleet
B) decrease production until MC = MR
C) increase production until MC = MR
D) stop production at 3,000th fish
E) decrease production until the marginal cost of the next unit is enough to pay for the workers, bait, and fuel

Question

Quizplus · Accepted Answer

In economic terms, if the price (or marginal revenue, MR) you receive for a fish is greater than the marginal cost (MC) of catching the next fish, it is profitable to increase production until the marginal cost equals the marginal revenue. This is because producing more will increase overall profit until the cost of producing an additional unit (MC) equals the revenue gained from selling that additional unit (MR).

The Marginal Cost of Catching a Fish Is the Same