Mbeya cement company which has rising short run Marginal cost Curve is currently operating at loss .Mbeya cement company's chief Economist says that if price rises a little the output should not be increased because If the Marginal cost would rise and the company would end up with bigger loss on higher volume .Should the chief Executive officer of Mbeya cement company listen to the chief Economist.Why and why not?

Answer 1

Yes, the Chief Executive Officer of Mbeya Cement Company should listen to the Chief Economist. The Chief Economist is likely to have a better understanding of the company's financial situation and the potential impact of increasing the price and output. The Chief Economist's advice is likely to be based on the company's current financial situation and the potential risks associated with increasing the price and output. The Chief Executive Officer should consider the advice of the Chief Economist and make a decision based on the best interests of the company.