A Firm Can Maximize Profits in the Short Run by Producing

question 8

Multiple Choice

A firm can maximize profits in the short run by producing output where

• A)MC = MR and the MC curve crosses the MR curve from above (as long as P>AVC)
• B)TC = TR
• C)MR - MC = TR - TC
• D)MC = MR and the MC curve crosses the MR curve from below (as long as P>AVC)
• E)TR = TC and the TC curve crosses the TR curve from below

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Definitions:

Carrying Costs

The total cost of holding inventory, including storage, insurance, taxes, and opportunity costs, among others.

Annual Ordering

Refers to the total cost and process associated with placing orders for goods or materials over the course of a year.

Gadgets

Small mechanical or electronic devices or tools, especially those that are ingenious or novel.

Carrying Cost

The total cost of holding inventory, including storage, handling, insurance, and opportunity costs, among others.