Final answer:
A profit-maximizing firm will not choose to produce at a quantity where marginal cost exceeds marginal revenue because it would lead to a decrease in profits.
Step-by-step explanation:
A profit-maximizing firm will not choose to produce at a quantity where marginal cost exceeds marginal revenue because it would lead to a decrease in profits. When the marginal cost exceeds the marginal revenue, it means that the cost of producing one additional unit is greater than the revenue generated from selling that unit. This indicates that the firm would be incurring losses if it continued to produce at that level.
For example, let's say a firm is producing and selling widgets at a certain quantity. The firm calculates that the marginal cost of producing an additional widget is $10, while the marginal revenue from selling that widget is only $5. In this case, producing the additional widget would result in a loss of $5 (($5 revenue - $10 cost) = -$5).
To maximize profits, a firm aims to produce at a quantity where marginal cost equals marginal revenue.