Question - Profit Maximization Decision Rules Correction
Solution:
For question 19, regarding profit maximizing decision rules, the statement that is incorrect is:C. MC should always be greater than MR to maximize profit.This statement is incorrect because to maximize profit, a firm should produce up to the point where marginal cost (MC) is equal to marginal revenue (MR), not where MC is greater than MR. Producing where MC is greater than MR would mean the firm is producing too much and would decrease its profitability. The correct profit-maximizing condition is when MC = MR, as stated in option D. Therefore, option C is the incorrect statement.
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