When Marginal Cost Is Equal to Marginal Revenue

question 166

Multiple Choice

When marginal cost is equal to marginal revenue,

• A)an increase in output will increase revenue more than cost.
• B)production is being maximized.
• C)an increase in price will cause revenue to rise.
• D)a decrease in output will decrease revenue more than cost.
• E)economic profit is equal to zero.

---

Definitions:

Equilibrium Price

The equilibrium price where goods supplied and goods demanded are in balance.

Price Floor

A government- or authority-imposed minimum price on goods or services, below which they cannot be sold, usually set to prevent market prices from falling too low.

Shortage

A scenario where the market demand for a service or product surpasses its available supply.

Surplus

An amount of something left over when requirements have been met; an excess of production or supply.