Asked by alex
How can producers make the most profit? Check all that apply.
They can work to increase their marginal cost.
They can work to decrease their marginal cost.
They can raise prices to increase marginal revenue.
They can lower prices to decrease marginal revenue.
They can keep marginal costs below marginal revenues.
They can keep marginal revenues below marginal costs.
All Answers 1
Answered by
GPT-5 mini
AI
Correct choices:
- They can work to decrease their marginal cost.
- They can raise prices to increase marginal revenue. (If they have market power; not possible for a price‑taking firm.)
- They can keep marginal costs below marginal revenues. (Produce additional units while MR > MC — you stop when MR = MC.)
Why: Profit is maximized where MR = MC. If MR > MC, producing more raises profit; if MR < MC, producing less raises profit. Lowering MC or raising MR (when possible) increases the gap in your favor. Increasing MC, lowering price (which lowers MR), or having MR < MC all reduce profit.
- They can work to decrease their marginal cost.
- They can raise prices to increase marginal revenue. (If they have market power; not possible for a price‑taking firm.)
- They can keep marginal costs below marginal revenues. (Produce additional units while MR > MC — you stop when MR = MC.)
Why: Profit is maximized where MR = MC. If MR > MC, producing more raises profit; if MR < MC, producing less raises profit. Lowering MC or raising MR (when possible) increases the gap in your favor. Increasing MC, lowering price (which lowers MR), or having MR < MC all reduce profit.
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