Asked by Walter Clark on Jun 10, 2024
Verified
If MR>MC,then the firm should
A) increase production
B) decrease production
C) keep the prices constant
D) keep the production level constant
MR>MC
A condition where marginal revenue (MR) exceeds marginal costs (MC), indicating a potential profit increase if production is expanded.
Increase Production
A process of ramping up the quantity of goods produced, often in response to higher demand or to achieve economies of scale.
Firm Should
A recommendation or strategy that a business organization is advised to follow in order to optimize performance, achieve objectives, or address specific challenges.
- Apply the concept of marginal analysis in production decisions.
Verified Answer
LT
Le Thi Huong (K14 DN)Jun 12, 2024
Final Answer :
A
Explanation :
When MR (Marginal Revenue) is greater than MC (Marginal Cost), it means that the firm can increase its profit by producing more. This is because the revenue generated by selling an additional unit of output is greater than the additional cost of producing that unit. Therefore, the firm should increase its production to maximize its profit.
Learning Objectives
- Apply the concept of marginal analysis in production decisions.