At the present level of production, the marginal revenue exceeds the marginal cost of production. In order to attain equilibrium, the producer should....
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Increase the level of output.
A producer reaches equilibrium when Marginal Revenue (MR) = Marginal Cost (MC).
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When MR > MC, it means the producer earns more revenue from selling an additional unit than the cost incurred to produce it.
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Therefore, producing more will increase profit until MR and MC become equal.