Consider the Following Transactions

question 9

Multiple Choice

Consider the following transactions:

Which of the above transactions increases profits?

• A) (i) only
• B) (ii) only
• C) (i) and (ii) only
• D) Neither

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Definitions:

Socially Optimal Level

A state at which the allocation of resources maximizes social welfare, often where marginal social benefit equals marginal social cost.

Marginal Revenue

Marginal revenue is the additional income received from selling one more unit of a product or service.

Marginal Cost

Marginal cost is the increase or decrease in the total cost of producing one additional unit of a good or service.

Total Revenue

The total amount of money generated by a firm from the sale of its goods or services, calculated before any expenses are subtracted.