If marginal revenue exceeds marginal costs,to increase profits a firm should:
A) reduce output.
B) increase output.
C) hold output constant.
D) increase marginal revenue.
E) reduce marginal cost.

Question

Quizplus · Accepted Answer

When marginal revenue exceeds marginal costs, it means that the revenue gained from producing one more unit is greater than the cost of producing that unit. Therefore, the firm should increase output to maximize profits. It is important to note that this is only true in the short run, as the firm may need to consider long-term costs and demand in the future.

If Marginal Revenue Exceeds Marginal Costs,to Increase Profits a Firm