Question

Christopher is a professional tennis player who gives tennis lessons. The industry is competitive. Christopher hires a business consultant to analyze his financial records. The consultant recommends that Christopher give fewer tennis lessons. The consultant must have concluded that Christopher’s

a. total revenues exceed his total accounting costs.
b. marginal revenue exceeds his total cost.
c. marginal revenue exceeds his marginal cost.
d. marginal cost exceeds his marginal revenue.

Answer 1

The correct answer is option d.

Step-by-step explanation:

Christopher is a professional tennis player who also gives tennis lessons.

The industry for tennis lessons is competitive.

Christopher will be able to maximize his profit by giving tennis lessons if the marginal revenue earned and the marginal cost incurred is equal.

Christopher's business consultant has recommended him to give fewer tennis lessons.

This means that Christopher must be incurring losses at the current level. In other words, the marginal cost of giving lessons is higher than the marginal revenue earned from it.