Question

What is a reason for a business to shift

more production of Product X than
Product z
A. lower profit margin for Product X
B. higher market price of Product X
C. equal opportunity cost for Product X

Answer 1

A. lower profit margin for Product X

Step-by-step explanation:

The reason why business would shift more production of X than Z is due to the fact that profit margin for Product X is higher than that of Z.

When doing business, the producers care most about the profit (profit = revenue - cost). The higher the profit is, the more the can really earn.

Meanwhile, the market price of each product may only reflect the revenue that the producers earn from a quantity of products, not the profit. In addition, it depends on the cost as well to determine if the higher price is beneficial or not.

And equal opportunity cost between X and Z means that produce one in these products would still benefit the business the same. So it would not affect the shift.