A firm is currently operating where the MC of the last unit produced is $84, and the MR of this unit is $70. What would you advise this firm to do?
A) Shut down.
B) Increase output.
C) Stay at its current output.
D) Decrease output.
E) Decrease price.

Question

Quizplus · Accepted Answer

The firm should decrease output because the marginal cost (MC) of $84 is greater than the marginal revenue (MR) of $70, indicating that the firm is producing too much and losing money on the last unit produced.

A Firm Is Currently Operating Where the MC of the Last