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The graph illustrates the marginal costs of a thermometer producer facing a constant selling price of $1.00 per thermometer. Suppose that to produce the level of output suggested by using marginal thinking analysis the thermometer producer incurs fixed costs of $20 and variable costs of $172. Would the producer maximize profits by producing at this level? a. Yes. Producers should always use "marginal thinking." b. Yes. Because revenues just cover total costs, the firm is breaking even. c. Yes. Because revenues exceed variable costs, the firm should produce at that level. d. No. Because revenues do not cover total costs, the firm should cease production. e. No. Because revenues do not cover variable costs, the firm should cease production. The graph illustrates the marginal costs of a thermometer producer facing a constant selling price of $1.00 per thermometer. 1.00 Marginal Cost Price Cost and Price ($) .50 60 100 120 Quantity of Thermometers Suppose that to produce the level of output suggested by using marginal thinking analysis the thermometer producer incurs fixed costs of $20 and variable costs of $172. Would the producer maximize profits by producing at this level? O a. Yes. Producers should always use "marginal thinking." O b. Yes. Because revenues just cover total costs, the firm is breaking even. O c. Yes. Because revenues exceed variable costs, the firm should produce at that level. O d. No. Because revenues do not cover total costs, the firm should cease production. O e. No. Because revenues do not cover variable costs, the firm should cease production.

The graph illustrates the marginal costs of a thermometer producer facing a constant selling price of $1.00 per thermometer. Suppose that to produce the level of output suggested by using marginal thinking analysis the thermometer producer incurs fixed costs of $20 and variable costs of $172. Would the producer maximize profits by producing at this level? a. Yes. Producers should always use "marginal thinking." b. Yes. Because revenues just cover total costs, the firm is breaking even. c. Yes. Because revenues exceed variable costs, the firm should produce at that level. d. No. Because revenues do not cover total costs, the firm should cease production. e. No. Because revenues do not cover variable costs, the firm should cease production. The graph illustrates the marginal costs of a thermometer producer facing a constant selling price of $1.00 per thermometer. 1.00 Marginal Cost Price Cost and Price ($) .50 60 100 120 Quantity of Thermometers Suppose that to produce the level of output suggested by using marginal thinking analysis the thermometer producer incurs fixed costs of $20 and variable costs of $172. Would the producer maximize profits by producing at this level? O a. Yes. Producers should always use "marginal thinking." O b. Yes. Because revenues just cover total costs, the firm is breaking even. O c. Yes. Because revenues exceed variable costs, the firm should produce at that level. O d. No. Because revenues do not cover total costs, the firm should cease production. O e. No. Because revenues do not cover variable costs, the firm should cease production.

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
Problem 5.6IP
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The graph illustrates the marginal costs of a thermometer producer facing a constant selling price of $1.00 per thermometer. Suppose that to produce the level of output suggested by using marginal thinking analysis the thermometer producer incurs fixed costs of $20 and variable costs of $172. Would the producer maximize profits by producing at this level? a. Yes. Producers should always use "marginal thinking." b. Yes. Because revenues just cover total costs, the firm is breaking even. c. Yes. Because revenues exceed variable costs, the firm should produce at that level. d. No. Because revenues do not cover total costs, the firm should cease production. e. No. Because revenues do not cover variable costs, the firm should cease production. The graph illustrates the marginal costs of a thermometer producer facing a constant selling price of $1.00 per thermometer. 1.00 Marginal Cost Price Cost and Price ($) .50 60 100 120 Quantity of Thermometers Suppose that to produce the level of output suggested by using marginal thinking analysis the thermometer producer incurs fixed costs of $20 and variable costs of $172. Would the producer maximize profits by producing at this level? O a. Yes. Producers should always use "marginal thinking." O b. Yes. Because revenues just cover total costs, the firm is breaking even. O c. Yes. Because revenues exceed variable costs, the firm should produce at that level. O d. No. Because revenues do not cover total costs, the firm should cease production. O e. No. Because revenues do not cover variable costs, the firm should cease production.
Transcribed Image Text:The graph illustrates the marginal costs of a thermometer producer facing a constant selling price of $1.00 per thermometer. Suppose that to produce the level of output suggested by using marginal thinking analysis the thermometer producer incurs fixed costs of $20 and variable costs of $172. Would the producer maximize profits by producing at this level? a. Yes. Producers should always use "marginal thinking." b. Yes. Because revenues just cover total costs, the firm is breaking even. c. Yes. Because revenues exceed variable costs, the firm should produce at that level. d. No. Because revenues do not cover total costs, the firm should cease production. e. No. Because revenues do not cover variable costs, the firm should cease production. The graph illustrates the marginal costs of a thermometer producer facing a constant selling price of $1.00 per thermometer. 1.00 Marginal Cost Price Cost and Price ($) .50 60 100 120 Quantity of Thermometers Suppose that to produce the level of output suggested by using marginal thinking analysis the thermometer producer incurs fixed costs of $20 and variable costs of $172. Would the producer maximize profits by producing at this level? O a. Yes. Producers should always use "marginal thinking." O b. Yes. Because revenues just cover total costs, the firm is breaking even. O c. Yes. Because revenues exceed variable costs, the firm should produce at that level. O d. No. Because revenues do not cover total costs, the firm should cease production. O e. No. Because revenues do not cover variable costs, the firm should cease production.
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