At the Socially Optimum Quantity of Production, Price Equals

question 161

Multiple Choice

At the socially optimum quantity of production, price equals:

• A) marginal cost.
• B) marginal revenue.
• C) average total cost.
• D) average variable cost.

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Definitions:

Total Revenue

The overall income generated by a firm from its sales activities before any costs or expenses are subtracted.

Normal Return

The minimum profit necessary for a company to remain in business, often equated to covering opportunity costs.

Total Fixed Costs

The sum of all costs required to produce any output, assuming they remain constant regardless of the level of production.

Fixed Costs

are expenses that do not change in response to the level of goods or services produced by a business, like rent or salaries.