Which of the Following Statements Best Expresses a Firm's Profit-Maximizing

question 46

Multiple Choice

Which of the following statements best expresses a firm's profit-maximizing decision rule?

• A)If marginal revenue is greater than marginal cost, the firm should increase its output.
• B)If marginal revenue is less than marginal cost, the firm should shut down in the short run.
• C)If marginal revenue equals marginal cost, the firm should produce exactly one more unit of output.
• D)All of the above are correct.

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Definitions:

Exponential Smoothing Model

A forecasting technique that applies smoothing constants to weight past observations, giving more importance to recent data.

Regression Method

A statistical approach used to model and analyze the relationships between a dependent variable and one or more independent variables.

Industrial Lathe Sales

The commercial activity surrounding the buying and selling of industrial lathes, which are machines used to shape metal, wood, or other materials.

First-Order Autoregressive Model

A time series model where the current value is based on a linear combination of the previous value and a stochastic error term.