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A small island nation produces only boxes of macaroni and cheese, most of which it sells in the export market. The world price per box is $10, regardless of the quantity exported. The nation has three macaroni-and-cheese factories, each of which varies in efficiency, but it's impossible for the government to determine each factory's marginal cost. To profit the most as a country, what should this nation's government do?

Answer :

Answer:

Shut down the two most inefficient factories and produce at the most efficient one until marginal cost is $10.

Explanation:

  • There are three macaroni and cheese factories that differ in efficiency, the government can close the inefficient factories and produce the most efficient one until the marginal cost is $ 10. Because it is a waste of time for unskilled factories, there will be more macaroni and cheese due to unskilled factories.
  • so to profit the most as a country, nation's government do Shut down the two most inefficient factories and produce at the most efficient one until marginal cost is $10.

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