McCain Foods Ltd.is one of the largest producer s of frozen french fries in the world. If the marginal cost of producing an extra million kilograms of french fries is $1 million, then McCain Foods Ltd.should produce the extra french fries
A)only if the marginal benefit is greater than $1 million plus an acceptable profit margin.
B)as long as the marginal benefit the firm receives is just equal to or greater than $1 million.
C)as long as the marginal cost does not rise.
D)until the marginal benefit the firm receives reaches zero.

Question

Quizplus · Accepted Answer

The correct answer is B because in economic terms, a firm should produce additional units as long as the marginal benefit (the additional revenue or satisfaction obtained from producing one more unit) is equal to or greater than the marginal cost (the cost of producing that additional unit). There's no need for the marginal benefit to exceed the marginal cost by a specific profit margin for the decision to produce more to be justified; it simply needs to meet or exceed the marginal cost.