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Suppose You Are Deciding Whether or Not to Increase Production

Question 147

Multiple Choice

Suppose you are deciding whether or not to increase production. You are making a loss with many competitors. If you produce one more unit your increase in cost will be $10, your average variable costs will increase to $9.50 and your average fixed costs will decrease. Finally, the price you are able to charge will be $9.75 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) Shut down

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