6. Consider the following statements: I. A firm with market power maximizes profit by producing so that P = MC, or equivalently, MR = MC. II. If marginal revenue exceeds marginal cost, the firm should expand output to increase profits. III. A firm should expand output to increase profits until marginal revenue falls to zero. IV. If a firm has zero production costs, it should continue producing until marginal revenue falls to zero. Which of the above statements are TRUE? (a) (II) and (IV) (b) (I) and (III) (c) (I) and (II) (d) (III) and (IV)

6. Consider the following statements: I. A firm with market power maximizes profit by producing so that P = MC, or equivalently, MR = MC. II. If marginal revenue exceeds marginal cost, the firm should expand output to increase profits. III. A firm should expand output to increase profits until marginal revenue falls to zero. IV. If a firm has zero production costs, it should continue producing until marginal revenue falls to zero. Which of the above statements are TRUE? (a) (II) and (IV) (b) (I) and (III) (c) (I) and (II) (d) (III) and (IV)

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 2CQQ

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