A Profit-Maximizing Firm in the Short Run Will Expand Output

question 47

Multiple Choice

A profit-maximizing firm in the short run will expand output

• A)until marginal cost begins to rise.
• B)until total revenue equals total cost.
• C)as long as marginal revenue is less than marginal cost.
• D)as long as marginal revenue is greater than marginal cost.

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Definitions:

MRP

Stands for Marginal Revenue Product, which is the additional revenue produced by hiring or utilizing an additional unit of a resource.

Output Increases

A situation where the production capacity of an economy grows, leading to more goods and services being available.

Productivity Rises

An increase in the efficiency of production, often leading to more output with the same or fewer inputs.

Relative Prices

The price of a commodity or service in comparison to another, indicating its opportunity cost and economic choice.