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Home Questions 3F2RY69X9A
Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Production and Costs

Question:

At the present level of production, the marginal revenue exceeds the marginal cost of production. In order to attain equilibrium, the producer should....

Options:

Increase the level of output.

Decrease the level of output.

Should keep the output level constant.

Should reduce the price of the product.

Correct Answer:

Increase the level of output.

Explanation:

The correct answer is Option (1) → Increase the level of output.

A producer reaches equilibrium when Marginal Revenue (MR) = Marginal Cost (MC).

  • When MR > MC, it means the producer earns more revenue from selling an additional unit than the cost incurred to produce it.

  • Therefore, producing more will increase profit until MR and MC become equal.

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