**Transcription for Educational Website**### Diagram ExplanationThe diagram shown in the video illustrates the relationship between Marginal Revenue (MR), Marginal Cost (MC), and Marginal Profit. The graph is labeled with "Costs & Revenue" on the vertical axis and "quantity (firm)" on the horizontal axis. - **MC Curve**: This upward-sloping green line represents the Marginal Cost, which increases as the quantity produced increases.- **MR (D=MR) Line**: This horizontal blue line represents the Marginal Revenue, which indicates the constant revenue gained from selling one more unit.- **Intersection Point (E)**: Point E is where the MR line intersects the MC curve, representing the profit-maximizing output level, denoted as q*.- **Marginal Profit Regions**: - To the left of point E, marginal profit is greater than zero, indicating that increasing production will increase profit. - To the right of point E, marginal profit is less than zero, suggesting that further production will decrease profit.### Question**74. In the video, when MC > MR, what action should the firm take to Maximize Profit?**Select one:- a. Increase Price- b. Decrease Quantity- c. Decrease Price- d. Increase Quantity(Select the correct option and click "Check" to verify your answer.)

74. Marginal revenue is the amount of revenue received from selling one additional unit. Marginal cost is the, amount of cost incurred from selling additional unit.The profit maximizing situation of firm is to choose an output level where marginal cost is equal to marginal revenue. When marginal cost is greater than marginal revenue (MC>MR), the firm will decrease the quantity of output up to the level where marginal revenue is equal to marginal cost (MR=MC) to maximize profit. Thus, option “b” is the correct answer.

Answered: 74. In the video, when MC > MR, what…

Business

Economics

74. In the video, when MC > MR, what action should the firm take to Maximize Profit. Select one: a. Increase Price b. Decrease Quantity c. Decrease Price d. Increase Quantity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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