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Suppose You Are Deciding Whether or Not to Increase Production

Question 149

Multiple Choice

Suppose you are deciding whether or not to increase production. You are currently making a profit. If you produce one more unit your increase in cost will be $10, your average variable costs will increase to less than that and your average fixed costs will decrease. Finally, your average revenue will increase to $12, but your increase in revenue will be $14. You should


A) Increase production by at least 1 unit.
B) Increase production by exactly 1 unit.
C) Leave production unchanged, profit is maximized where you are.
D) Redo the math associated with decreasing production because that may result in greater profit.

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