If a Profit-Maximizing Firm Is Currently Producing Where MR =

question 53

Multiple Choice

If a profit-maximizing firm is currently producing where MR = MC, it should

• A) increase output so that marginal revenue is less than marginal cost.
• B) decrease output so that marginal revenue will be greater than marginal cost and the firm's profit will increase.
• C) not change because it is already maximizing profit.
• D) exit the industry.

---

Definitions:

Equity Plan

A compensation strategy companies use to provide their employees with ownership interest in the company, often through stock options or shares.

Break-Even EBIT

The level of Earnings Before Interest and Taxes at which a company covers all its operating expenses and does not make a profit or loss.

Bond Issue

The process by which a government or corporation raises funds by selling bonds to investors, which are then repaid with interest at a future date.

Coupon

The interest rate stated on a bond, representing the amount of interest paid to bondholders on an annual basis.