Question

a firm is currently operating where the mc of the last unit produced equals $64, and the mr of this unit equals $70. what would you advise this firm to do?
a. shut down.
b. decrease output.
c. increase output.
d. stay at current output.

Explanation:

Profit maximization for firms occurs when marginal revenue (MR) equals marginal cost (MC). When MR > MC, producing an additional unit adds more to revenue than to cost, increasing total profit. Here, $MR = \$70$ and $MC = \$64$, so $MR > MC$.

Answer:

c. Increase output.