Firms may reasonably decide to cut prices if
A)profits are not likely to decline.
B)marginal profit is not negative.
C)MR MC.
D)All of the responses are correct.

Question

Firms may reasonably decide to cut prices if
A)profits are not likely to decline.
B)marginal profit is not negative.
C)MR > MC.
D)All of the responses are correct.

Quizplus · Accepted Answer

All the options provided are valid reasons for a firm to consider cutting prices. A) If profits are not likely to decline, reducing prices could stimulate demand without harming profitability. B) If marginal profit is not negative, it means that selling an additional unit still adds to overall profit, making a price cut potentially beneficial for increasing volume. C) If marginal revenue (MR) is greater than marginal cost (MC), it indicates that selling additional units at a lower price could still be profitable, as the revenue from selling an additional unit exceeds the cost of producing it.

Firms May Reasonably Decide to Cut Prices If