Firms __________ output as long as the revenue from additional production __________ the cost of that production.
A)expand,is less than
B)contract,is less than
C)contract,exceeds
D)expand,exceeds
E)expand,is equal to

Question

Quizplus · Accepted Answer

Firms will expand output as long as the revenue from additional production exceeds the cost of that production. This will allow the firm to make a profit and increase their overall revenue. Conversely, if the revenue from additional production is less than the cost of that production, the firm will contract output in order to avoid losses. Therefore, option D is the most appropriate answer.

Firms __________ Output as Long as the Revenue from Additional