To maximize profit, firms should keep producing as long as marginal revenue is:

Question

Quizplus · Accepted Answer

Firms should produce as long as the marginal revenue is greater than the marginal cost. This is because at this point, the firm is producing additional units at a lower cost than what the market is willing to pay for them, meaning that each additional unit increases the overall profit of the firm. When marginal revenue is equal to marginal cost, the firm is producing at its profit-maximizing point, which is still acceptable. However, if the marginal revenue falls below the marginal cost, the firm is losing money on each additional unit produced, and it should stop production to avoid further losses. Therefore, option A is the best choice.

To Maximize Profit, Firms Should Keep Producing as Long as Marginal