Consider this statement... "A firm should increase output when it makes a profit." Do you agree or disagree?

Question

Please explain........

Answer 1

I guess it depends on the situation. do you mean they should use the profit to increase output? Is there a demand for the increase? Advertising is always a good use of unexpected revenue for a company. How much profit? Either way, it should be invested back into the company in one way or another.

Answer 2

the goal of a firm is for its profit be equal to zero. thus, as long as a firm makes positive profit, it should add up output to make the profit zero.

take note that the profits take all the cost into consideration, even the salary of the manager or the owner. so the difference between the profit and expenses is the salary of the owner, and that salary is a salary expense which should make the profit zero. :)

Answer 3

"the goal of a firm is for its profit be equal to zero."

LOL I got an A in micro economics and I am pretty sure that the goal of a firm is to MAXIMIZE profits.

But, to answer your question, the answer is no.  If a firm is already at the point where mr=mc, they have maximizing profit.  Any increase in production would lead to a loss because mr<mc.