A Firm Sets Its Output Where

question 19

Multiple Choice

A firm sets its output where

• A)marginal profit is zero.
• B)marginal revenue is maximized.
• C)marginal profit equals marginal revenue.
• D)marginal profit is maximized.

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Definitions:

Profitable Output

The level of production at which a business or economic activity yields the maximum profit.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services to consumers in exchange for money.

Total Profit

The overall financial gain made by a business after subtracting all costs from the total revenue generated from its operations.

AVC

Average Variable Cost; the total variable cost divided by the quantity of output produced.