When selling 500 units of output, a firm's marginal revenue is greater than its marginal cost, but its total revenue is less than its total cost. If the firm were to increase its sales from 500 units it would:
A) reduce its loss.
B) increase its loss.
C) reduce its profit.
D) increase its profit.

Question

Quizplus · Accepted Answer

Since marginal revenue is greater than marginal cost, selling additional units will add more to revenue than to cost, thus reducing the firm's loss.

When Selling 500 Units of Output, a Firm's Marginal Revenue