Question

Apply Concepts In which of these situations would a manufacturer decide to produce more units? A. The marginal benefit is equal to the marginal cost. B. The marginal cost is greater than the marginal benefit. C. The marginal benefit is less than the marginal cost. D. The marginal cost is less than the marginal benefit.

Answer 1

D. The marginal cost is less than the marginal benefit.

Step-by-step explanation:

In making decision when to produce at economies of scale businesses analyse the marginal cost and marginal benefit of a product.

Marginal cost is the dollar amount spent by a company in producing a good, while marginal benefit is on the customer side.

It is the amount of money a consumer is willing to pay for a good. This declines over time as consumption increases.

The best time for a manufacturer to produce more goods is when the amount the consumer is willing to pay (marginal benefit) is more than the cost of producing the good (marginal cost).

This scenario results in more profit for the manufacturer.