Marginal Revenue vs. Total Costs in Industry Entry

Answered using GPT-4o mini by AI Answer Generator

Question:

Firms should enter the industry if marginal revenue is greater than total costs.

False

True

Answer:

False.

Firms should enter the industry if marginal revenue is greater than marginal cost, not total costs. When marginal revenue exceeds marginal cost, it indicates that the firm can increase its profit by producing more. Total costs are not the direct factor for entry; rather, it's the relationship between marginal revenue and marginal cost that guides the decision to enter or exit an