If a cartel can earn a profit, it will increase production as long as A)MR MC B)MR ATC C)MC MR D)MR AVC

Question

If a cartel can earn a profit, it will increase production as long as
A)MR > MC
B)MR > ATC
C)MC > MR
D)MR < AR
E)MR > AVC

Quizplus · Accepted Answer

A cartel will increase production as long as its marginal revenue (MR) is greater than its marginal cost (MC). This is because for each additional unit of output, the cartel is earning more revenue than the cost of producing that unit. Therefore, the cartel can earn additional profits by increasing production until MR = MC. Choice A is the only option that correctly states this condition.

If a Cartel Can Earn a Profit, It Will Increase