If marginal revenue is greater than marginal cost,the producer must reduce the level of output to maximize profit.

Question

Quizplus · Accepted Answer

If marginal revenue is greater than marginal cost, it means that producing one more unit will yield more revenue than it costs to produce that unit. Thus, the producer should increase output to maximize profit, not reduce it. Profit is maximized at the level of output where marginal cost equals marginal revenue.

If Marginal Revenue Is Greater Than Marginal Cost,the Producer Must