It's logical, it's a rule of thumb, it's an economic guideline: As long as MR

Question

It's logical, it's a rule of thumb, it's an economic guideline: As long as MR < MC, and the firm responds by increasing the quantity it produces,
A) profit will equal zero
B) profit will increase
C) profit will decrease
D) profit will remain unchanged
E) the firm will minimize loss

Quizplus · Accepted Answer

When marginal revenue (MR) is less than marginal cost (MC), producing additional units will decrease profit because the cost of producing one more unit is greater than the revenue it generates.

It's Logical, It's a Rule of Thumb, It's an Economic