WGU Global Economics for Managers Exam - Topic 3 Question 5 Discussion

Actual exam question for WGU's Global Economics for Managers exam

Question #: 5
Topic #: 3

[All Global Economics for Managers Questions]

The marginal cost of producing a computer is $600, but the marginal revenue is $1,000. What is the best action for the respective firm?

ADecrease production

BExit the market

CIncrease production

DPause production

Show Suggested Answer

Suggested Answer: C

According to Global Economics for Managers, firms should increase production when marginal revenue (MR) exceeds marginal cost (MC), making option C correct.

In this case, MR = $1,000 and MC = $600. Producing one additional unit generates more revenue than cost, increasing profit by $400. Rational, profit-maximizing firms should continue expanding output as long as MR > MC.

This decision rule applies across market structures, including monopoly, oligopoly, and perfect competition. The firm should stop increasing production only when MR equals MC.

Options A, B, and D would cause the firm to forgo profitable opportunities.

Thus, option C is the correct managerial response.

by Merissa at May 02, 2026, 08:10 AM

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Shelton

17 days ago

This reminds me of a practice question where we had to decide based on profit maximization. I feel like increasing production makes sense here.

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Laine

22 days ago

I'm not entirely sure, but I remember something about maximizing profit when MR exceeds MC. So, maybe it's C?

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Earleen

27 days ago

I think if marginal revenue is higher than marginal cost, the firm should increase production, right?

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