Question

at which level of production does the company make the least profit?

○ the first pair of cleats
○ the second pair of cleats
○ the third pair of cleats
○ the fourth pair of cleats

Explanation:

To determine the production level with the least profit, we analyze the marginal profit (profit from each additional unit). Typically, the first unit (first pair of cleats) has the least profit because fixed costs are spread over the first unit, and as production increases, economies of scale or better cost - revenue balance (like lower average fixed cost, better pricing, or cost efficiency) can increase the profit per unit. So the first pair of cleats is likely to have the least profit.

Answer:

A. the first pair of cleats