If the Price Exceeds the Average Variable Cost, by Producing

question 269

Multiple Choice

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will

• A) earn an economic profit.
• B) not suffer any losses.
• C) earn the largest profit possible.
• D) survive in the long run.

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Definitions:

Total Utility

The total satisfaction or benefit received by consuming a good or service.

Utility Schedule

A table or chart displaying various combinations of goods or services and the utility or satisfaction obtained from each combination.

Diminishing Marginal Utility

The principle that as a person increases consumption of a product, there is a decline in the marginal utility that person derives from consuming each additional unit of that product.

Utility Schedule

A table or graph that displays an individual's or group's satisfaction or utility levels derived from consuming different amounts of a good or service.