Which of the Following Offers the Best Explanation of Why

question 57

Multiple Choice

Which of the following offers the best explanation of why "marginal revenue equals marginal cost" is the rule that indicates the profit-maximizing output level?

• A) If output were reduced from the profit-maximizing level, then the firm would be gaining marginal revenue that exceeds marginal cost, and thus increasing the level of profit.
• B) If output were increased from the profit-maximizing level, then the firm would be gaining marginal revenue that is less than the marginal cost incurred in producing this additional unit, and thus reducing the level of profit.
• C) Because the firm colludes with other similar firms to set price equal to marginal cost.
• D) The marginal revenue is equal to the marginal cost at all levels of output for a perfectly competitive firm.

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Definitions:

Partial Reinforcement

A technique in behavior psychology where only some responses are reinforced, leading to more resistant behavior change.

Negative Reinforcement

A behavioral concept where the removal of an unfavorable event or condition increases the likelihood of a behavior being repeated.

Positive Reinforcement

A technique in behaviorism where the introduction of a rewarding stimulus following a desired behavior increases the likelihood of it being repeated.

Snake Phobia

An intense, irrational fear of snakes, often leading to avoidance behavior.