When marginal cost is rising and exceeds marginal revenue, the profit-maximizing firm will
A) produce more.
B) produce less.
C) continue producing the same level of output in the short run.
D) shut down in the long run.
E) exit in the long run.

Question

Quizplus · Accepted Answer

When marginal cost exceeds marginal revenue, the firm is experiencing diminishing returns, which will decrease their profit. Therefore, the firm should decrease production to maximize profit.

When Marginal Cost Is Rising and Exceeds Marginal Revenue, the Profit-Maximizing