If current output is less than the profit-maximizing output, then the next unit produced
A) will decrease profit.
B) will increase cost more than it increases revenue.
C) will increase revenue more than it increases cost.
D) will increase revenue without increasing cost.
E) may or may not increase profit.

Question

Quizplus · Accepted Answer

If current output is less than the profit-maximizing output, then the marginal revenue of producing another unit will be greater than the marginal cost of producing another unit. This means that producing one more unit will increase revenue more than it increases cost, thus increasing profit. Therefore, choice C is the correct answer.

If Current Output Is Less Than the Profit-Maximizing Output, Then