Question

QUESTION 49 A firm is currently producing where MC=$5 and MR=$10. This firm is O profit-maximizing under-producing over-producing O no conclusion can be made QUESTION 50 A firm should increase its production when O marginal revenue rises and marginal cost stays the same O marginal cost rises and marginal revenue stays the same O both marginal cost and marginal revenue are falling both marginal cost and marginal revenue are rising

Answer 1

49

When MC = 5 and MR = 10

Then the firm is producing at a level where MC < MR, so it should increase production until MC = MR to maximize profit

Therefore the firm is under-producing

Second option is correct

50

A firm should increase its production when MR is more than MC to maximize profits

First option is correct