In the short-run, if a firm increases output when MR MC, then:

Question

In the short-run, if a firm increases output when MR > MC, then:

Quizplus · Accepted Answer

When a firm increases output where MR>MC, it means that the additional revenue generated from producing an extra unit of output is greater than the cost incurred to produce that extra unit. This will lead to an increase in profit, as long as the price is greater than the average variable cost. Therefore, the firm should produce at the point where MR=MC in the short-run to maximize profits.

In the Short-Run, If a Firm Increases Output When MR