If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then,
A) the firm's perceived demand will shift to the left.
B) the firm should keep expanding production.
C) each marginal unit adds profit by bringing in less revenue than its cost.
D) the firm is now earning zero for profit.

Question

Quizplus · Accepted Answer

When marginal revenue exceeds marginal cost, it means that producing additional units will bring in more revenue than the cost of producing those units, thus increasing profit. Therefore, the firm should expand production to increase profits until marginal revenue equals marginal cost.

If the Firm Is Producing at a Quantity of Output