Suppose That a Firm Is Producing Where MR > MC

question 9

Multiple Choice

Suppose that a firm is producing where MR > MC. If the firm produced one more unit of output, total revenue would ____ and total cost would ____.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

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Definitions:

Single-Owner

Pertains to a business that is exclusively owned by one individual who is responsible for its operations and liabilities.

Business Organization

An entity formed for the purpose of carrying out commercial enterprise, including options such as sole proprietorships, partnerships, and corporations.

Partnership

A legal form of business operation where two or more individuals share ownership, as well as the responsibility for managing the business and the sharing of its profits and losses.

Personal Income Tax

A tax levied on an individual's income, including wages, salaries, and other earnings, by the government.