ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Reduce output
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Increase output
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Leave output where it is
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Increase costs
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Detailed explanation-1: -When marginal revenue is less than the marginal cost of production, a company is producing too much and should decrease its quantity supplied until marginal revenue equals the marginal cost of production.
Detailed explanation-2: -A perfectly competitive firm maximizes its profits by producing at the point where MR=MC. If the marginal cost falls below the marginal revenue (MC<MR), then the firm should increase its output in order to increase its profits.
Detailed explanation-3: -If marginal revenue is higher than marginal cost, your company should raise production levels to improve efficiency and generate more profit overall. If marginal cost is higher than marginal revenue, your business should lower production levels to reduce profit loss.
Detailed explanation-4: -Profit is maxmized at the level of output where the cost of producing an additional unit of output (MC) equals the revenue that would be received from that additional unit of output (MR).