A Strategy Guide to the Game of Tennis. If C'(70) = 197 and R'(70) = 73, which one of the following statements is true?

Question

A. Since marginal cost is greater than marginal revenue, total profits are negative when 70 items have been sold.

B. Producing and selling the 71st item will decrease total profits.

C. Since marginal cost is greater than marginal revenue, total profits are positive when 70 items have been sold.

D. Producing and selling the 71st item will increase total profits.

Answer 1

B, with greater output, profits will decrease

MC=MR is the profit maximizing output level

if MC>MR output is more the than profit maximizing level and further output increase will decrease profits

D is incorrect

A and C are incorrect, because with the given information you can't tell if profits are negative or positive.