If a firm is producing where MR

Question

If a firm is producing where MR < MC
A) the revenue gained by producing one more unit of output exceeds the cost incurred by doing so.
B) the revenue gained by producing one more unit of output equals the cost incurred by doing so.
C) the revenue gained by producing one more unit of output is less than the cost incurred by doing so.
D) the firm is already maximizing profits because revenue is being decreased by more than costs.

Quizplus · Accepted Answer

When MR (Marginal Revenue) is less than MC (Marginal Cost), it means that the cost of producing an additional unit is higher than the revenue it generates, indicating that the firm is not maximizing profits by producing that extra unit.

If a Firm Is Producing Where MR < MC