Refer to Figure 17.1.Which of these will hold true if the manager is given a budget of $155?
A)She should produce 6 units of output because profits are maximized.
B)She should produce 8 units of output to maximize output for the budget.
C)She should try to produce 9 units of output because average costs are minimized.
D)She should lobby her boss for more money.

Question

Refer to Figure 17.1.Which of these will hold true if the manager is given a budget of $155? 
A)She should produce 6 units of output because profits are maximized. 
B)She should produce 8 units of output to maximize output for the budget. 
C)She should try to produce 9 units of output because average costs are minimized. 
D)She should lobby her boss for more money.

Quizplus · Accepted Answer

According to the graph, producing 8 units of output will use up the entire budget of $155 while still maximizing output. Producing more units will result in higher average costs and lower profits, while producing fewer units will not use up the entire budget and will result in lower output and lower profits. So, the manager should produce 8 units of output to maximize output for the budget.