Fresh Laundry is a firm that produces laundry detergent. The table above summarizes Fresh Laundry's product quality marg revenue and marginal cost at various quality levels.
-Refer to the table above. If Fresh Laundry is currently producing 6 quality units, to maximize profit, Fresh Laundry should ______the number of quality units as the current quality marginal revenue is______ than its marginal cost.

Question

Quizplus · Accepted Answer

To maximize profit, a firm should produce until marginal revenue equals marginal cost. If the marginal revenue of producing an additional unit of quality is greater than the marginal cost, the firm can increase its profit by producing more. Therefore, if the current marginal revenue is greater than the marginal cost, Fresh Laundry should increase the number of quality units.

Fresh Laundry Is a Firm That Produces Laundry Detergent