Which of the following best describes the rational rule for sellers in microeconomics?

• A. Sell one more unit if the marginal cost is greater than the marginal revenue.
• B. Sell one more unit if the average cost is less than the price.
• C. Sell one more unit if the total revenue exceeds total cost.
• D. Sell one more unit if the marginal revenue is greater than or equal to the marginal cost.

Answer: (D)

Verified step by step guidance

1. Understand the concept of marginal revenue (MR) and marginal cost (MC). Marginal revenue is the additional revenue gained from selling one more unit of a good, while marginal cost is the additional cost incurred from producing one more unit.
2. Recall the profit-maximizing rule for sellers: to maximize profit, a firm should produce up to the point where marginal revenue equals marginal cost, i.e., \(MR = MC\).
3. Analyze the decision to sell one more unit: if the marginal revenue from selling that unit is greater than or equal to the marginal cost of producing it (\(MR \geq MC\)), selling the unit will increase or maintain profit.
4. Recognize that if marginal cost exceeds marginal revenue (\(MC > MR\)), producing and selling an additional unit would reduce profit, so the firm should not sell more units in that case.
5. Conclude that the rational rule for sellers is to sell one more unit if and only if the marginal revenue is greater than or equal to the marginal cost, which ensures profit maximization.