If marginal revenue exceeds marginal cost, a price-taker firm should
A) expand output.
B) reduce output.
C) lower its price.
D) do both a and c.

Name: If marginal revenue exceeds marginal cost, a price-taker firm should A) expand output. B) reduce output. C) lower its price. D) do both a and c.
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Question

Quizplus · Accepted Answer

When marginal revenue exceeds marginal cost, the firm can increase its profit by expanding output, as each additional unit sold adds more to revenue than it does to cost.

If Marginal Revenue Exceeds Marginal Cost, a Price-Taker Firm Should