Assume that the marginal revenue associated with the 12^th unit of output is $25 and the marginal cost is $14. As a result, the firm should produce more, because the marginal profit at that output level is greater than zero.

Question

Quizplus · Accepted Answer

If the marginal revenue ($25) is greater than the marginal cost ($14), then producing one more unit of output will result in a positive marginal profit. Therefore, the firm should produce more at this output level to increase their profits.

Assume That the Marginal Revenue Associated with the 12th Unit

Assume That the Marginal Revenue Associated with the 12^th Unit