If a firm increases output when MR MC, then:
A) profit will equal zero.
B) profit will increase.
C) profit will decrease.
D) profit will remain the same.
E) the firm is minimizing losses.

Question

If a firm increases output when MR > MC, then:
A) profit will equal zero.
B) profit will increase.
C) profit will decrease.
D) profit will remain the same.
E) the firm is minimizing losses.

Quizplus · Accepted Answer

If a firm increases output when MR > MC, it means the additional revenue from producing one more unit is greater than the additional cost incurred in producing that unit. This will increase the firm's profit because it can sell more units at a higher price than it costs to produce them.

If a Firm Increases Output When MR > MC, Then