The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client.Table 9.2

-A producer can raise profit by expanding output if his:
A)marginal revenue is equal to marginal cost.
B)marginal revenue is less than marginal cost.
C)marginal revenue is negative.
D)marginal cost is negative.
E)marginal revenue is greater than marginal cost.

Question

The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client.Table 9.2
 
-A producer can raise profit by expanding output if his:
A)marginal revenue is equal to marginal cost. 
B)marginal revenue is less than marginal cost. 
C)marginal revenue is negative. 
D)marginal cost is negative. 
E)marginal revenue is greater than marginal cost.

Quizplus · Accepted Answer

A producer can raise profit by expanding output if his marginal revenue is greater than marginal cost. This is because, as long as the marginal revenue is greater than the marginal cost, the additional revenue generated from producing one more unit is greater than the additional cost incurred. Therefore, the producer will continue to earn a profit as long as the marginal revenue is greater than the marginal cost.

The Table Given Below Reports the Marginal Revenue and Marginal