A Firm Maximises Its Profit by Producing the Amount of Output

question 65

Multiple Choice

A firm maximises its profit by producing the amount of output such that

• A) marginal revenue equals marginal cost.
• B) marginal cost is minimised.
• C) marginal revenue is maximised.
• D) marginal revenue exceeds marginal cost by some amount.
• E) marginal revenue exceeds marginal cost by the maximum amount possible.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against an asset since it was put into service.

Straight-line Method

An accounting method for calculating depreciation by evenly distributing the cost of an asset over its useful life.

Residual Value

The estimated remaining value of an asset at the end of its useful life.

Salvage Value

The anticipated end-of-life value of an asset once it has finished its useful period.