How can producers maximize their 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,

The can lower prices to decrease marginal revenue,

They can keep marginal costs below marginal revenues,

They can keep marginal revenues below marginal costs.

Question

Business

Seth Bautista

12 January, 08:43

How can producers maximize their 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,

The can lower prices to decrease marginal revenue,

They can keep marginal costs below marginal revenues,

They can keep marginal revenues below marginal costs.

+5

Answers (1)

Know the Answer?

Veronica Adkins · Answer 1

They can work to decrease their marginal cost.

They can raise prices to increase marginal revenue,

They can keep marginal costs below marginal revenues,

Explanation:

Marginal cost is the additional expense incurred by producing an extra unit. Marginal revenue is the extra profit realized by selling an additional product or service. To maximize profits, firms should stop selling and production activities when the marginal cost equal to marginal revenue. A profit-maximizing firm is profitable when marginal revenue is greater than or equal to marginal cost.

Profit is obtained by deducting expenses from revenue. To increase profits, a firm should put more effort into increasing revenues while minimizing costs. A profit-maximizing firm should, therefore, work hard to decrease marginal cost and improve its marginal revenue.