Beyond the sales level that achieves maximum profits,total costs rise at a faster rate than total revenue.

Question

Quizplus · Accepted Answer

This is because as the level of sales increases beyond the point of maximum profits, the firm incurs additional costs such as overtime pay, higher material costs, and increased administrative expenses, which contribute to an increase in total costs. However, the additional revenue generated by increased sales is not enough to cover these extra costs, resulting in lower profits or even losses.

Beyond the Sales Level That Achieves Maximum Profits,total Costs Rise