An upward shift in marginal cost _____ output and an upward shift in marginal revenue ______ output?
Correct answer: B. reduces; increases
- A. reduces; reduces
- B. reduces; increases
- C. increases; increases
- D. increases; reduces
Explanation
An upward shift in marginal cost makes each output level less profitable and reduces the profit-maximising output. An upward shift in marginal revenue makes additional output more rewarding and increases the chosen output.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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