QQuestionBusiness Management
QuestionBusiness Management
"To generate higher profit margins, producers must work to:
A. increase their total supply.
B. increase their total expenses.
C. decrease their customer base.
D. decrease their production costs."
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Answer
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Step 1: Identify the correct answer based on economic principles.
The correct answer is D. decrease their production costs. This is because decreasing production costs directly increases the profit margin for each unit produced, assuming the selling price remains constant.
Step 2: Explain the reasoning behind the correct answer.
Production costs are the expenses incurred in the process of manufacturing a product. These costs include raw materials, labor, and overhead expenses. By decreasing production costs, producers can increase their profit margins, which is the difference between the selling price and the production cost per unit. This leads to higher profits without requiring an increase in sales volume.
Final Answer
The correct answer is D. Decrease their production costs to generate higher profit margins.
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