Exhibit 22-2 ​ Refer to Exhibit 22-2. If the Firm Produces the Quantity

question 38

Multiple Choice

Exhibit 22-2 ​

Refer to Exhibit 22-2. If the firm produces the quantity of output at which marginal revenue (MR) equals marginal cost (MC) , is it guaranteed maximum profit or minimized loss?

• A)Yes, when MR = MC, it follows that MR - MC = 0, and thus the firm maximizes profit and minimizes losses.
• B)No, at the quantity of output at which MR = MC, it could be the case that average variable cost is greater than price and the firm would do better to shut down.
• C)Yes, when the firm produces the quantity at which MR = MC, it has maximized both revenue and profit.
• D)Yes, because if the MC curve is rising, the average total cost curve always lies below it and thus profit is earned.

---

Definitions:

Contingency Plan

A contingency plan is a proactive strategy developed to address potential future events or situations that could negatively affect an organization's objectives or operations.

Union Steward

A representative of the labor force who serves as an intermediary between union members and management, advocating for workers' rights and interests.

Immediate Supervisors

Managers or leaders who have direct oversight over the work of other employees.

Collective Bargaining Model

A process of negotiation between employers and a group of employees aimed at agreements to regulate working salaries, working conditions, and other aspects of workers' compensation and rights.