When Marginal Cost Exceeds Marginal Revenue

question 119

Multiple Choice

When marginal cost exceeds marginal revenue,

• A)marginal profit < 0.
• B)the firm should increase output.
• C)marginal profit + marginal cost > marginal revenue.
• D)marginal cost < marginal revenue - marginal profit.

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Definitions:

Periodic Inventory System

A periodic inventory system is a method of inventory valuation in which physical inventory counts are performed at specific intervals to determine the cost of goods sold and ending inventory.

Ending Inventory

The total value of a company's inventory available at the end of an accounting period, instrumental in calculating the cost of goods sold.

Purchased Units

Units of goods or services acquired through purchase, often used to refer to inventory items bought for resale in business operations.

Perpetual Moving Average

A method in inventory management where the average cost of inventory is recalculated after each acquisition or sale, ensuring up-to-date and accurate inventory valuations.