If a profit-maximizing firm finds that,at its current level of production,MR

Question

If a profit-maximizing firm finds that,at its current level of production,MR < MC,it will
A) decrease output.
B) increase output.
C) shut down.
D) operate at a loss.

Quizplus · Accepted Answer

If MR < MC, producing one more unit of output will result in the marginal cost being greater than the marginal revenue earned from that unit. Therefore, the firm will decrease its output to reach the point where MR = MC, which is the profit maximizing level of output.

If a Profit-Maximizing Firm Finds That,at Its Current Level of Production,MR