If a Firm Is Producing Where MR > MC

question 108

Multiple Choice

If a firm is producing where MR > MC

• A) the revenue gained by producing one more unit of output exceeds the cost incurred by doing so.
• B) the revenue gained by producing one more unit of output equals the cost incurred by doing so.
• C) the revenue gained by producing one more unit of output is less than the cost incurred by doing so.
• D) the firm is already maximizing profits because revenue is being increased by more than costs.

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Definitions:

Variable Factors

In economics, these are inputs or resources whose quantity can be changed in the short term to adjust the level of output.

Warehouse Space

The area available in a warehouse for the storage of goods, products, or materials.

Marginal Cost Curves

Graphical representations that show how the cost of producing one additional unit of a good varies as the quantity of output produced changes.

Profit Maximizers

Refers to firms or individuals who alter their production or operational levels to achieve the highest possible profit margins.