In the short run, a profit- maximizing firm will expand output
A) until total revenue equals total cost.
B) as long as marginal revenue is greater than marginal cost.
C) until marginal revenue equals average variable cost.
D) as long as marginal cost is greater than marginal revenue.
E) until marginal cost begins to rise.

Question

Quizplus · Accepted Answer

A profit-maximizing firm will expand output as long as marginal revenue is greater than marginal cost. This is because producing one more unit will add more revenue than cost, resulting in an increase in profit. Therefore, it makes sense for the firm to keep expanding output as long as it remains profitable to do so.

In the Short Run, a Profit- Maximizing Firm Will Expand