A firm should decrease its output if marginal cost is greater than marginal revenue.

Question

Quizplus · Accepted Answer

If a firm's marginal cost is greater than its marginal revenue, it means that the cost of producing an additional unit is greater than the revenue received from selling that unit. This implies that the firm is losing money on each additional unit produced and sold, and it would be more profitable for the firm to reduce its output until marginal cost is equal to marginal revenue. Therefore, the firm should decrease its output if marginal cost is greater than marginal revenue.

A Firm Should Decrease Its Output If Marginal Cost Is