**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…

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

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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**Transcription for Educational Website**

### Diagram Explanation
The 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.)

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