Marginal cost is always positive; therefore, marginal revenue at the profit-maximizing output will have to be ________.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.anegativebpositivecequal to 0
Question
Marginal cost is always positive; therefore, marginal revenue at the profit-maximizing output will have to be ________.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.anegativebpositivecequal to 0
Solution
The correct answer is bpositive.
Here's why:
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Marginal cost is the cost of producing one additional unit of a good. It is always positive because it costs something to produce more goods.
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Marginal revenue is the additional revenue that a firm receives from selling one more unit of a good.
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In order to maximize profit, a firm will produce up to the point where marginal cost equals marginal revenue.
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Therefore, if marginal cost is always positive, marginal revenue at the profit-maximizing output will also have to be positive. If it were negative, the firm would be losing money on each additional unit sold, which would not be profit-maximizing. If it were zero, the firm would be making no additional money from selling more units, which also would not be profit-maximizing.
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