Refer to the Following

Multiple Choice

Refer to the following:

A firm with two factories, one in Michigan and one in Texas, has decided that it should produce a total of 500 units of output in order to maximize profit. The firm is currently producing 200 units in the Michigan factory and 300 units in the Texas factory.

At this allocation between plants, the last unit of output produced in Michigan added $5 to total cost, while the last unit of output produced in Texas added $3 to total cost.


-The firm

A) is maximizing profit; should keep producing 200 units in Michigan and 300 units in Texas.
B) should produce 250 units in each factory.
C) should produce more in the Michigan factory and less in the Texas factory.
D) should produce more in the Texas factory and less in the Michigan factory.