Assertion (A): A firm does not stop where MC = MR if MC is falling there.
Reason (R): If MC is falling, the next units cost less than they bring in.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Both are true.
Beyond a point where falling MC meets MR, MC drops below MR, so more output adds profit (R); that is why the firm goes on (A).

Concept: Why falling MC is not equilibrium
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsProducer's equilibrium: MC = MR

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Assertion (A): A firm does not stop where MC = MR if MC is falling there.Reason (R): If MC is falling, the next units cost less than they bring in.

Explanation

Assertion (A): A firm does not stop where MC = MR if MC is falling there.
Reason (R): If MC is falling, the next units cost less than they bring in.