If the marginal cost of producing a television is constant at $200,then a firm should produce this item
A)only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin.
B)as long as the marginal benefit it receives is just equal to or greater than $200.
C)as long as its marginal cost does not rise.
D)until the marginal benefit it receives reaches zero.

Question

Quizplus · Accepted Answer

If the marginal cost of producing a television is constant at $200, it means that the cost of producing an additional television is the same. So, as long as the marginal benefit received is just equal to or greater than $200, producing more units will result in a profit. If the marginal cost is less than the marginal benefit, the firm will gain positive profits. Hence, the firm should produce the item as long as the marginal benefit it receives is just equal to or greater than $200.

If the Marginal Cost of Producing a Television Is Constant