If a firm finds out that its marginal revenue is greater than its marginal cost, it should:
A)increase production and sales.
B)decrease production and sales.
C)encourage the entry of other firms into the market.
D)keep raising its selling price till marginal revenue equals marginal cost.
E)change nothing because profits are maximized.

Question

Quizplus · Accepted Answer

If a firm finds out that its marginal revenue is greater than its marginal cost, it means that the firm can generate more revenue by producing and selling more units of its product. Therefore, the firm should increase production and sales to maximize its profits.

If a Firm Finds Out That Its Marginal Revenue Is