Suppose a monopolistically competitive firm is making a profit but it can increase its profits by increasing output.Then it must be the case that at the current level of output:
A)marginal revenue is greater than marginal cost.
B)price is less than marginal cost.
C)price is less than average total cost.
D)marginal revenue is less than marginal cost.

Question

Quizplus · Accepted Answer

If a firm can increase its profits by increasing output, it means that marginal revenue is greater than marginal cost, as producing more will add more to revenue than to cost.

Suppose a Monopolistically Competitive Firm Is Making a Profit but It