A Firm Maximizes Its Profit by Producing the Amount of Output

question 188

Multiple Choice

A firm maximizes its profit by producing the amount of output such that

• A) marginal revenue equals marginal cost.
• B) marginal revenue exceeds marginal cost by some amount.
• C) marginal revenue is maximized.
• D) marginal cost is minimized.
• E) marginal revenue exceeds marginal cost by the maximum amount possible.

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Definitions:

Income Summary

An account used in the closing process during the accounting cycle that sums up all revenues and expenses for the period to determine the net income or loss for the period.

Retained Earnings

The sum of a company's earnings up to the present, reduced by any shareholder dividends or distributions.

Total Assets

The sum of all assets owned by a company, including both current and fixed assets, as represented on the balance sheet.

Dividends

Disbursements issued by a company to its shareholders, usually sourced from the organization's earnings.