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A firm will produce and sell units of a good if marginal revenue is greater than marginal cost. Does this strategy have anything to do with the firm's objective to maximize profit? Explain.
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Answered 1 year ago
Step 1
1 of 4It is stated that the company will produce and sell products if marginal revenue is greater than marginal cost.
We have to explain if that strategy has anything to do with the company's objective to maximize profit.
Answered 2 years ago
The two conditions of maximizing profits and MR = MC are exactly the same. This is because as long as MR exceeds MC, the total revenue exceeds total costs and company earns positive profits. This profits are maximized when the MR and MC are exactly equal.
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