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1 mark

The marginal cost is much less than the marginal revenue for a product. The company selling the product should:

  1. A
    stop its production immediately
  2. B
    sell more products to maximize the profits until marginal cost equals marginal revenue
  3. C
    sell the product at an increased cost price
  4. D
    None of the above

Solution & Step-by-step Explanation

In economics, profit is maximized when Marginal Revenue (MR) = Marginal Cost (MC).If MR > MC, it means that producing one additional unit brings in more revenue than the cost to produce it. Therefore, total profit increases as production increases. The company should continue to expand production and sales until the point where the cost of the next unit (MC) rises to meet the revenue from it (MR).

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The marginal cost is much less than the marginal revenue for a product. The company selling the product should:
A
stop its production immediately
B
sell more products to maximize the profits until marginal cost equals marginal revenue
C
sell the product at an increased cost price
D
None of the above

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