A firm’s marginal revenue is $133 and its marginal cost is $90. What amount of profit does the firm fail to pick up by refusing to increase output by one unit?
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Profit = Marginal Revenue - Marginal Cost Show more…
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Assume a firm's marginal costs are increasing at its current level of output: If a firm's marginal revenue is less than the marginal cost of producing the last unit of output chosen by the firm, then: Profits can be increased if the firm decreases output. The firm is certainly earning an economic profit but not as much as it could be Profits can be increased if the firm increases output. The firm's economic profit is necessarily less than zero_
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Suppose the price declined from $131 to $100. This firm's: a. marginal-cost curve would shift downward. b. economic profit would fall to zero. c. profit-maximizing output would decline. d. total cost would fall by more than its total revenue.
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