As a general rule of economics, companies should only produce and sell units as long as ________.
A) there is customer demand for the product
B) there is a relatively small supply of the product when compared to past operating periods
C) the revenue from an additional unit exceeds the cost of producing it
D) there is a generous supply of low-cost direct materials

Question

Quizplus · Accepted Answer

The general rule of economics is that companies should only produce and sell units as long as the revenue from an additional unit exceeds the cost of producing it. This ensures that the company is making a profit and not losing money on each unit sold. Without this profit, the company may not be able to sustain its operations in the long run. Therefore, option C is the best choice. Options A and D are incorrect since customer demand and the availability of low-cost materials may not necessarily result in profitability. Option B is also incorrect since having a small supply of the product does not necessarily indicate profitability.

As a General Rule of Economics, Companies Should Only Produce