1. if marginal revenue is less than marginal cost.
2. if the supply of money increases, regardless of marginal revenue and marginal cost.
3. if the demand for money decreases, regardless of marginal revenue and marginal cost.
4. in all of the above situations.
Choose the correct option.
Option 1 is the correct choice. To increase its output price, the firm must reduce output. If the marginal revenue is less than marginal cost, the reduction in revenue from a one unit decline in output will be less than the reduction in cost and total profit will increase. Changes in the supply and demand for money of the sorts outlined in other options will cause the firm to increase its price, but the firm will do this as a result of changes in marginal revenue and marginal cost, not independently of them.