Producing any quantity of output less than the point where the marginal revenue and marginal cost curves intersect leads to:
A)average total cost that is lower than average variable cost.
B)marginal cost that is higher than marginal revenue.
C)marginal revenue that is higher than marginal cost.
D)a loss of profits when producing the units.

Question

Quizplus · Accepted Answer

Producing any quantity of output less than the point where the marginal revenue (MR) and marginal cost (MC) curves intersect means that MR is still higher than MC for additional units produced. This implies that the firm could increase profits by producing more, as each additional unit's revenue would exceed its cost.

Producing Any Quantity of Output Less Than the Point Where