If a firm is producing an output level for which marginal revenue exceeds marginal cost, a. the firm can increase profits by producing and selling more output. b. the firm can increase profits by producing and selling less output. c. the firm is maximizing profits. d. whether or not the firm is maximizing profits cannot be determined

If a firm is producing an output level for which marginal revenue exceeds marginal cost,
a. the firm can increase profits by producing and selling more output.
b. the firm can increase profits by producing and selling less output.
c. the firm is maximizing profits.
d. whether or not the firm is maximizing profits cannot be determined.

Answer

• a. the firm can increase profits by producing and selling more output.
  Explanation:
  The marginal revenue is the revenue received from producing one additional unit of a good while the cost a firm incurs for producing the additional unit is called marginal cost. If the marginal revenue is greater than the marginal cost of production, it implies that the firm is not producing enough goods to meet demand, and hence to maximize profits, the firm should increase output.