If marginal cost is greater than marginal revenue, a ﬁrm should expand its output in order to maximize proﬁts.

Question

Quizplus · Accepted Answer

If marginal cost is greater than marginal revenue, it means that the cost to produce an additional unit is higher than the revenue it generates. Therefore, expanding output would only result in further losses, rather than maximizing profits. The firm should instead decrease output to a point where marginal cost equals marginal revenue.

If Marginal Cost Is Greater Than Marginal Revenue, a ﬁRm