If the marginal revenue is greater than the marginal cost at a certain level of production, then the firm should respond by: a. Decreasing production. b. Firing workers. c. Increasing production. d. Exiting the market.

If the marginal revenue is greater than the marginal cost at a certain level of production, then the firm should respond by: a. Decreasing production. b. Firing workers. c. Increasing production. d. Exiting the market.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section: Chapter Questions

Problem 3QP

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Concept explainers

Profit Maximization

Economic activity is related to the use of scarce resources of the economy that are used for producing goods and services which are required to satisfy various demands of the people. In other words, it can be said that it is all about satisfying the unlimited demands of individuals with the limited resources available. The production decision is taken by the producers or the firms. In economics, the terms ‘producers’, ‘suppliers’, and ‘firms’ are interchangeable. Now the question arises, what does a firm actually mean?

Question

If the marginal revenue is greater than the marginal cost at a certain level of production, then the firm should respond by:

	a.	Decreasing production.
	b.	Firing workers.
	c.	Increasing production.
	d.	Exiting the market.

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