If the marginal cost of adding a new line of products is $10 million, then Amazon should add the product
A) if marginal costs fall.
B) if marginal benefits fall.
C) if marginal benefits are less than $10 million.
D) if marginal benefits are more than $10 million.
E) if Amazon does not operate at a loss.

Question

Quizplus · Accepted Answer

Adding a new line of products should only be done if the marginal benefits (revenue gained by selling the new product) are greater than the marginal cost of adding the product. In this case, the marginal cost of adding a new line of products is $10 million. Therefore, Amazon should add the product only if the marginal benefits (revenue gained by selling the new product) are more than $10 million.

If the Marginal Cost of Adding a New Line of Products