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Suppose a firm produces 20 units of output. At that level of output, marginal revenue is $30 and marginal cost is $50. At this level of output, the firm is:___________.

User Flornquake
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Answer:

losing money.

Step-by-step explanation:

In order to maximize their profit, organizations must sell there products until their marginal cost = marginal revenue.

In this case, the marginal cost is much higher than marginal revenue, therefore the organization should change the number of units produced in order to lower their marginal costs. Sometimes marginal costs can be lowered by increasing production output and other times by decreasing output, it depends on their costs. High fixed costs are usually better distributed in larger production outputs.

If that doesn't work, the organization should consider exiting that market.

User Dolf Andringa
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