A producer can raise profit by expanding output if:
A)marginal revenue is equal to marginal cost.
B)marginal revenue is less than marginal cost.
C)marginal revenue is negative.
D)marginal cost is negative.
E)marginal revenue is greater than marginal cost.

Question

Quizplus · Accepted Answer

Marginal Revenue (MR) is the additional revenue received when one more unit of the good is sold. Marginal Cost (MC) is the additional cost incurred when one more unit is produced. In order for the producer to raise profit by expanding output, the marginal revenue earned from selling the additional unit of output must be greater than the additional cost of producing that unit. This condition is satisfied only when marginal revenue is greater than marginal cost (MR > MC), hence the correct choice is E.

A Producer Can Raise Profit by Expanding Output If