Assuming Price Is Greater Than Long-Run Average Cost and That

question 25

Multiple Choice

Assuming price is greater than long-run average cost and that at higher output levels marginal revenue is less that marginal cost, the firm will maximize profit in the long run if:

• A) marginal revenue is maximized.
• B) marginal cost is minimized.
• C) marginal revenue is equal to marginal cost.
• D) marginal profit is maximized.
• E) total revenue is equal to total cost.

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Definitions:

Certainty Effect

The tendency for people to favor options that are certain over those that are probable, even when the probable options may result in a better outcome.

Risk Aversion

Risk Aversion is the tendency to avoid or minimize risks, reflecting a preference for certainty or safer options when making decisions under conditions of uncertainty.

Zeigarnik Effect

A tendency to experience automatic, intrusive thoughts about a goal whose pursuit has been interrupted.

Temporal Discounting

The tendency to value immediate rewards more highly than future rewards, affecting decision-making and impulse control.