If Marginal Cost Exceeds Marginal Revenue

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• Marginal costs

  Producing and selling 1 more units adds more to total revenue than to total cost, thereby increasing total profit. If marginal cost exceeds marginal revenue, the extra unit of output reduces total profit.

• Firm should produce in the short run or shut down

  Marginal revenue exceeds marginal cost at the current output level. e) Price exceeds average total cost at all output levels. f) Average variable cost exceeds price at all output levels.

• Multiple choice firm profitability questions

  total cost b. average total revenue exceeds its average variable cost c. marginal cost exceeds marginal revenue d. marginal revenue exceeds marginal cost 3.In the dominant firm model of oligopoly, the dominant firm acts as if it was a a. perfect

• Profit-maximizing output

  At larger or smaller output levels, marginal cost exceeds marginal revenue or marginal revenue exceeds marginal cost.

• Multiple Choice

  the marginal benefit Benefit of information exceeds the marginal cost Benefit of information exceeds the marginal cost.

• Profits of a price taking firm

  As a result, the firm will expand output as long as marginal revenue exceeds marginal cost, and it will stop expanding before marginal cost rises above marginal revenue. This rule is sometimes called the golden rule of profit maximization.

• Optimal Output for Short-Run Profit Maximization is Marginal Revenue = Marginal Cost

  On the other hand, if marginal cost exceeds marginal revenue, the firm will be selling units for less than they cost to make.

• Monopolist and Monopolistically competitive markets

  b. marginal revenue is equal to marginal cost.

• Completing statements on perfect competition

  If marginal revenue is greater than marginal cost, the firm can increase revenue by selling more. The minimum average total cost also gives us this point. The firm shuts down in the short run when the average variable cost exceeds the price.