For a firm producing at any level of output LOWER than the most profitable one,an increase in output adds:

Question

Quizplus · Accepted Answer

When a firm is producing at a level of output lower than the most profitable one, increasing output will add more to total revenue than to total cost. This is because the firm is operating in a region where the marginal revenue (the additional revenue from selling one more unit) is greater than the marginal cost (the additional cost of producing one more unit). This situation encourages the firm to increase production until it reaches the point where marginal revenue equals marginal cost, which is the most profitable level of output.

For a Firm Producing at Any Level of Output LOWER