4. A firm will produce as long as a marginal cost and marginal revenue are the same. True or False

Question

4. A firm will produce as long as a marginal cost and marginal revenue are the same. True or False

Answer 1

False

Answer 2

I'm guessing false because in economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. Mathematically, the marginal cost (MC) function is expressed as the derivative of the total cost (TC) function with respect to quantity (Q). Note that the marginal cost may change with volume, and so at each level of production, the marginal cost is the cost of the next unit produced.

And to support that, in microeconomics, Marginal Revenue (MR) is the extra revenue that an additional unit of product will bring. It can also be described as the change in total revenue/change in number of units sold.

More formally, marginal revenue is equal to the change in total revenue over the change in quantity when the change in quantity is equal to one unit (or the change in output in the bracket where the change in revenue has occurred)

marginal revenue equation---

http://en.wikipedia.org/wiki/Marginal_re...

marginal cost equation---

http://en.wikipedia.org/wiki/Marginal_co...

Answer 3

I dont think so.  I think they produce as long as marginal revenues are greater than marginal costs.

Answer 4

False - Though for most cases it is true because it's firm's equilibrium condition MR=MC - but it is only valid until firm covers it's variable costs (TR≥VC), and below this condition firm will shut-down.

Answer 5

Using yahoo to answer homework... priceless,  i believe it's false. If cost and revenue are the same you wouldn't make a profit.