If Total Revenue Exceeds the Total Cost of Production, a Firm

question 52

Multiple Choice

If total revenue exceeds the total cost of production, a firm

• A) earns a profit.
• B) suffers a loss.
• C) breaks even.
• D) shuts down.

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Definitions:

Marginal Cost

The cost incurred by producing one more unit of a product or service.

Supply Curve

A graph showing the relationship between the price of a good or service and the amount of it that suppliers are willing to offer for sale at each price level.

Law Of Demand

The principle that, other things equal, an increase in a product’s price will reduce the quantity of it demanded, and conversely for a decrease in price.

Government Subsidy

Financial support provided by a government to individuals, businesses, or other governmental entities to support economic activities deemed beneficial.