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

Name: It's logical, it's a rule of thumb, it's an economic guideline: As long as MR < MC, and the firm responds by decreasing 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
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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 decreasing 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 MR < MC, reducing production will decrease costs more than it decreases revenue, thus increasing profit.

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