A firm is currently producing at a level where its MC = 10 and its MR = 5.We can conclude that this firm is
A) profit maximizing.
B) under-producing.
C) over-producing.
D) no definite conclusion can be made about the firm's level of production.

Question

Quizplus · Accepted Answer

In a profit-maximizing scenario, a firm should produce up to the point where marginal cost (MC) equals marginal revenue (MR). If MC > MR, as in this case, the firm is producing more than the profit-maximizing quantity, indicating it is over-producing.

A Firm Is Currently Producing at a Level Where Its