Raiman's Shoe Repair produces custom-made shoes. When Mr. Raiman produces 12 pairs per week, the marginal cost of the 12th pair is $84, and the marginal revenue of the 12th pair is $70. What would you advise Mr. Raiman to do?

A) Shut down the business
B) Produce more custom-made shoes
C) Decrease the price
D) Produce fewer custom-made shoes

Question

Ariana Edwards · Accepted Answer

Final Answer : D, Explanation :  Since the marginal cost ($84) of producing the 12th pair of shoes is higher than the marginal revenue ($70) generated from selling it, Mr. Raiman is losing money on each additional pair produced beyond the 11th pair. Therefore, he should produce fewer custom-made shoes to increase or maximize profit.

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