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.

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Definitions:

Writing Requirement

A legal stipulation that certain kinds of contracts must be in writing to be enforceable.

Purchase Price

The amount of money that is required to buy something.

Incorporation

The process of legally declaring a corporate entity to be separate from its owners, thereby providing limited liability and other benefits.

Capacity to Contract

The legal ability of an individual or entity to enter into a binding contract, having the necessary age, mental state, and authority.