Which of the following rules is most consistent with profit maximization? A)expand output when MR MC C)expand output when TR TC D)reduce output when TR TC E)expand output when MR MC

Question

Which of the following rules is most consistent with profit maximization?
A)expand output when MR < MC
B)reduce output when MR > MC
C)expand output when TR > TC
D)reduce output when TR > TC
E)expand output when MR > MC

Quizplus · Accepted Answer

The rule that is most consistent with profit maximization is to expand output when marginal revenue (MR) is greater than marginal cost (MC). This is because when MR is greater than MC, the additional revenue earned from producing one more unit is greater than the additional cost incurred in producing that unit, which results in an increase in total profit. Therefore, choice E - expand output when MR > MC - is the best choice for profit maximization.

Which of the Following Rules Is Most Consistent with Profit