A furniture maker currently produces 100 tables per week and sells them for a profit.She is considering expanding her operation in order to make more tables.Should she expand
A)Yes, because making tables is profitable.
B)No, because she may not be able to sell the additional tables.
C)It depends on the marginal cost of producing more tables and the marginal revenue she will earn from selling more tables.
D)It depends on the average cost of producing more tables and the average revenue she will earn from selling more tables.

Question

Quizplus · Accepted Answer

The decision to expand should be based on the comparison of the marginal cost with the marginal revenue. If the marginal revenue is higher than the marginal cost, the furniture maker should expand as she can earn additional profit by producing and selling more tables. However, if the marginal cost exceeds the marginal revenue, expanding would lead to a loss. Therefore, the furniture maker needs to consider the costs associated with expansion and analyze the market demand before making a decision.

A Furniture Maker Currently Produces 100 Tables Per Week and Sells