alleryStart learning →When marginal cost is above marginal revenue, cutting output does what to profit?
ALeaves it same
BEliminates it
CReduces it
DRaises it
Answer & Solution
Correct answer: D. Raises it
Reducing output saves more cost than the revenue lost until marginal revenue equals marginal cost.
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Related questions
Sales Rs 1,00,000, fixed cost Rs 30,000, profit Rs 20,000. What is the P/V ratio?A unit sells for Rs 25 with variable cost Rs 15. What is the P/V ratio?Fixed cost falls from Rs 40,000 to Rs 32,000, contribution Rs 8 a unit. New break-even?Fixed cost Rs 30,000, variable cost Rs 5 a unit, break-even at 3,000 units. Break-even revSales rise Rs 1,00,000 at a 30% P/V ratio, fixed cost unchanged. Profit rises by?A firm sells 200 units beyond break-even at contribution Rs 15. Extra profit?Price is Rs 80 and the P/V ratio is 25%. What is the variable cost per unit?Break-even is 2,500 units and the price is Rs 40. What are break-even sales?