If a firm's marginal revenue is greater than its marginal cost, then the firm should
A) increase output to increase profit.
B) decrease output to increase profit.
C) keep output the same.
D) collect additional information before taking any action.

Question

Quizplus · Accepted Answer

When a firm's marginal revenue (the additional revenue from selling one more unit of a product) is greater than its marginal cost (the additional cost of producing one more unit of the product), increasing output will increase the firm's profit. This is because each additional unit sold adds more to revenue than it adds to costs, thereby increasing overall profit.

If a Firm's Marginal Revenue Is Greater Than Its Marginal