Asked by Tatiana Cortes on Jun 08, 2024
Verified
Firms will continue to produce if:
A) the marginal benefits of producing an additional unit are greater than the marginal costs of producing that unit.
B) the marginal benefits of producing an additional unit are less than the marginal costs of producing that unit.
C) the marginal benefit of producing an additional unit is equal to the marginal cost of producing that unit.
D) the costs of producing the unit stay constant.
Marginal Benefits
The additional satisfaction or utility that a person gains from consuming an additional unit of a good or service.
Marginal Costs
The cost added by producing one additional unit of a product or service.
Producing
The process of creating goods or services to be offered to the market.
- Identify the circumstances that justify the continued production of extra units by companies.
Verified Answer
ÁÁ
Á?á Á?qú?áJun 11, 2024
Final Answer :
A
Explanation :
Firms produce as long as the marginal benefit of producing an additional unit is greater than the marginal cost of producing that unit. By doing so, they can maximize their profits. If the marginal benefit is less than the marginal cost or if the costs are increasing, it may not be profitable for the firm to produce more units. Therefore, A is the correct choice.
Learning Objectives
- Identify the circumstances that justify the continued production of extra units by companies.
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