The Second-Order Condition for a Firm Maximizing Its Profit Operating

question 49

Multiple Choice

The second-order condition for a firm maximizing its profit operating in a monopolistically competitive market is:

• A) −(d²C(Q)/dQ²) < 0.
• B) (d²R (Q)/dQ²) − (d²C(Q)/dQ²) < 0.
• C) (d²R (Q)/dQ²) = (d²C(Q)/dQ²).
• D) (dMR/dQ) > (dMC/dQ).

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Definitions:

Overtime

The time worked beyond the standard hours set by a company's policy, often compensated at a higher pay rate.

Cost-plus Pricing

Pricing strategy where a fixed percentage is added to the total cost of making a product to determine its selling price.

Required Rate of Return

The minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.

Contribution Margin

Contribution margin is the amount by which sales revenue exceeds variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.