Suppose it costs a firm $200 million to produce and promote a sequel.If the firm follows the marginal principle and decides not to produce the movie,which of the following must be true?

Question

Quizplus · Accepted Answer

The firm decides not to produce the movie because it believes the marginal benefit (the additional revenue or gain from producing the sequel) is less than the marginal cost of $200 million required to produce and promote it. This decision aligns with the marginal principle, which suggests that an action should be taken if, and only if, the marginal benefit is greater than the marginal cost.

Suppose It Costs a Firm $200 Million to Produce and Promote