A Firm Should _____ Output Whenever MR Exceeds MC Because

question 95

Multiple Choice

A firm should _____ output whenever MR exceeds MC because _____.

• A) reduce; revenues will rise by more than costs, increasing the firm's profit
• B) reduce; total revenues exceed total costs
• C) expand; revenues will rise by more than costs, increasing the firm's profit
• D) not change; selling more output will increase marginal revenue by less than marginal cost

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Definitions:

Cash Bidding Price

The price offered in cash during an auction or bidding process for an asset or item.

Market Price

The market price at which you can currently buy or sell an asset or service.

Interest Tax Savings

The reduction in tax payments resulting from the deduction of interest payments on debt from taxable income.

Discount Rate

In DCF analysis, the rate used to calculate the present worth of future cash flows.