If a marginal analysis concludes that the productivity of a firm is at its optimal output, what would the firm have to do to increase revenue?
a) lay off workers
b) increase the price of the product
c) decrease the supply of the product
d) use materials of higher quality to make the product

B) increase the price of the product

Explanation:

The term marginal means the gain or loss resulting from unit produced or labor.  Marginal analysis is the process of evaluating the additional revenue resulting from the sale of one more unit in comparison to the extra expense incurred in the production of the good or service.  The optimal output is a level of production where marginal revenue matches the marginal cost.

For a firm to make profits, marginal revenue must exceed marginal cost. At the optimal level, increased production does not result in profits. To make the firm profitable, the firm has to either increase marginal revenue or decrease marginal cost. From the options available, an increase in selling price will increase marginal revenue which will result in profits

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