If marginal cost is greater than marginal revenue, then profit maximization demands that a...
Question:
If marginal cost is greater than marginal revenue, then profit maximization demands that a company does which of the following?
a. increase its output
b. decrease its output only if the company is perfectly competitive
c. decrease its output
d. decrease its output only if the company is a monopoly
Marginal Analysis:
The word marginal in economics is used a lot because we assume rational individuals think at the margin. They decide whether to do something based on the perceived marginal benefit and cost of an action.
Answer and Explanation: 1
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View this answerAnswer: C
All firms maximize output where marginal revenue equals marginal cost regardless of what market they operate in. Marginal revenue tends to...
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Marginal Analysis in Economics: Definition, Formula & Examples
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Chapter 3 / Lesson 47
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