Asked by Johnny Schinas on May 01, 2024
Verified
At the current level of production,if the firm's MR>MC,then the firm should
A) produce more
B) the company is maximizing profit at this output
C) producing less
D) None of the above
Marginal Revenue (MR)
The incremental earnings obtained from the sale of an additional good or service unit.
Marginal Cost (MC)
The increase or decrease in the total cost that arises when the quantity produced changes by one unit.
Production Level
The quantity of goods or services produced by a business, factory, or industry over a specific period.
- Utilize marginal analysis principles to determine the best production choices, recognizing the appropriate times for enhancing or sustaining production levels.
Verified Answer
JN
Jennica NewkirkMay 07, 2024
Final Answer :
A
Explanation :
If the firm's MR>MC, it means that the marginal revenue earned from producing an additional unit of output is greater than the marginal cost of producing that unit. This indicates that the firm can increase its profit by producing more. Therefore, the best choice is to produce more.
Learning Objectives
- Utilize marginal analysis principles to determine the best production choices, recognizing the appropriate times for enhancing or sustaining production levels.