A Firm Will Maximize Profit at the Level of Output

question 247

Multiple Choice

A firm will maximize profit at the level of output where ________.

• A) its marginal revenue equals its total cost
• B) its marginal revenue equals its marginal cost
• C) its total cost equals its total revenue
• D) its average revenue equals its average cost

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Definitions:

Marginal Revenue

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

Total Revenue

The overall amount of money generated by a business from its activities, such as sales of goods or services, before any expenses are subtracted.

Marginal Revenue

The additional income obtained from selling one more unit of a product or service.

Marginal Cost

The increment in total pricing necessary for the creation of one more unit of any good or service.