Which of the following will result in a firm increasing its level of production?
A) An increase in its Marginal Costs.
B) A decrease in its Marginal Revenue.
C) An increase in its Fixed Costs.
D) An increase in the price of its product.

Question

Quizplus · Accepted Answer

An increase in the price of its product will result in an increase in the firm's revenue, which can be used to increase production. In contrast, increasing marginal costs (A) or fixed costs (C) would decrease a firm's profits, making it less likely to increase production. A decrease in marginal revenue (B) would also lead to lower profits, and therefore, would not incentivize a firm to increase production.

Which of the Following Will Result in a Firm Increasing