Refer to the accompanying figure to answer the following questions.

-If a firm is producing a quantity of 100 and charging a price of $25,it
A) should raise production to 150 units but lower the price to $10 to maximize profits.
B) should raise production to 150 units and continue to charge $25 to maximize profits.
C) should keep production at 100 units but lower the price to $13 to maximize profits.
D) should keep production at 100 units and lower the price to $10 to maximize profits.
E) is already maximizing profits and should not change the price or quantity produced.

Question

Refer to the accompanying figure to answer the following questions.
 
-If a firm is producing a quantity of 100 and charging a price of $25,it
A) should raise production to 150 units but lower the price to $10 to maximize profits. 
B) should raise production to 150 units and continue to charge $25 to maximize profits. 
C) should keep production at 100 units but lower the price to $13 to maximize profits. 
D) should keep production at 100 units and lower the price to $10 to maximize profits. 
E) is already maximizing profits and should not change the price or quantity produced.

Quizplus · Accepted Answer

Without specific information on costs, demand elasticity, or the market structure, it's impossible to determine the optimal production level and price. Therefore, without additional data, we cannot assume a change in quantity or price would necessarily lead to profit maximization.

Refer to the Accompanying Figure to Answer the Following Questions