If Marginal Revenue Exceeds Marginal Cost, a Price-Taker Firm Should

question 249

Multiple Choice

If marginal revenue exceeds marginal cost, a price-taker firm should

• A) expand output.
• B) reduce output.
• C) lower its price.
• D) do both a and c.

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Definitions:

Monopoly Supply Curve

A theoretical concept indicating that a monopoly does not have a traditional supply curve because its output decision depends on the demand it faces and its cost structure.

Average Variable Costs

The total variable costs of production divided by the quantity of output produced.

Demand Changes

Variations in the desire or need for a product or service, influenced by factors like price, income levels, and consumer preferences.

Price

The value that must be exchanged to obtain a good or service.