Asked by Kristin Kowing on Jun 29, 2024
Verified
If MR > MC for a competitive firm, it should reduce its level of output in order to make MR equal to MC.
Marginal Cost (MC)
Marginal cost is the increase in total cost that arises from producing one additional unit of a product or service.
Marginal Revenue (MR)
The enhanced earnings from distributing an additional unit of a good or service.
- Assess the role of marginal cost and marginal revenue in optimizing production levels.
Verified Answer
MS
Madison SouzaJul 03, 2024
Final Answer :
False
Explanation :
A competitive firm should increase its level of output when MR > MC to maximize profit, as producing more will increase total revenue more than total cost until MR = MC.
Learning Objectives
- Assess the role of marginal cost and marginal revenue in optimizing production levels.
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