Answered: If a firm's marginal revenue is below…

If a firm's marginal revenue is below its marginal cost, an increase in production will usually: a. increase profits b. leave profits unchanged c. decrease profits d. increase marginal revenue

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

If a firm's marginal revenue is below its marginal cost, an increase in production will usually:

a. increase profits

b. leave profits unchanged

c. decrease profits

d. increase marginal revenue

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