If marginal revenue and marginal cost are not equal, profit can be maximized by
A)increasing output if MR MC.
B)decreasing output if MC MR.
C)moving to the output where the slopes of TR and TC are equal.
D)All of the responses are correct.

Question

If marginal revenue and marginal cost are not equal, profit can be maximized by
A)increasing output if MR > MC.
B)decreasing output if MC > MR.
C)moving to the output where the slopes of TR and TC are equal.
D)All of the responses are correct.

Quizplus · Accepted Answer

All the responses correctly describe actions that a firm can take to maximize profit depending on the relationship between marginal revenue (MR) and marginal cost (MC). Increasing output when MR > MC, decreasing output when MC > MR, and adjusting output to where the slopes of total revenue (TR) and total cost (TC) are equal (which implies MR = MC) are all strategies to maximize profit.

If Marginal Revenue and Marginal Cost Are Not Equal, Profit