Discuss WGU Global Economics For Managers (C211) Exam Topic 3 Question 5

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

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.

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24 comments · newest first

Jame 2 days ago

Agreed! Marginal revenue is higher than marginal cost.

Reita 7 days ago

I think the answer is C) Increase production.

Phuong 12 days ago

Fair point, but current numbers favor C.

Tess 18 days ago

I just worry about long-term sustainability.

Cordelia 23 days ago

Exactly! Keep producing while it's profitable!

Gaynell 28 days ago

Why decrease when you can maximize profits?

Alline 1 month ago

I feel like A) Decrease production could be risky.

Phuong 1 month ago

True, but right now, profits are good. C is still best.

Tess 1 month ago

But what if demand drops later? Shouldn't we consider that?

Cordelia 2 months ago

Agreed! $1,000 - $600 is a profit. Why stop?

Gaynell 2 months ago

I think the answer is C) Increase production. More revenue than cost!

Rosio 2 months ago

But what if demand drops later?

Glory 2 months ago

This is classic profit maximization!

Timothy 2 months ago

Wait, are we sure about that? Seems risky to just ramp up.

Ngoc 2 months ago

Totally agree, C is the way to go!

Alyssa 3 months ago

Marginal cost is lower than marginal revenue, so increase production!

Trinidad 3 months ago

I feel like I've seen a question like this before, and the answer was to increase production since the firm is making a profit on each additional unit.

Samuel 3 months ago

I'm a bit confused about the options. If the firm is making a profit, why would they consider pausing or exiting the market?

Elizabeth 3 months ago

I remember a similar question where we had to decide based on profit maximization. If MR > MC, it usually means to increase production, right?

Shawnta 3 months ago

I think the marginal revenue being higher than marginal cost means the firm should increase production, but I'm not completely sure.

Stephania 4 months ago

I’m a bit confused. Couldn’t they also consider pausing production if they’re not sure about future demand? But I guess that’s not the best option if MR is higher.

Shelton 5 months 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.

Laine 5 months ago

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

Earleen 5 months ago

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

WGU Global Economics for Managers (C211) Exam - Topic 3 Question 5 Discussion