A Basic Condition That Determines a Firm's Profits Is

question 58

Multiple Choice

A basic condition that determines a firm's profits is:

• A) the firm's costs of distribution.
• B) taxes.
• C) the amount of value customers place on the firm's goods.
• D) government regulations.
• E) variable costs

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Definitions:

MC

Marginal Cost, the increase in total cost that arises from producing one additional unit of a product or service.

Natural Monopoly

A type of monopoly that arises due to high fixed or start-up costs associated with a business which makes it impractical for more than one firm to produce the same product or service efficiently.

Fixed Costs

Costs that do not vary with the level of production or business activity, such as rent, salaries, and insurance, remaining constant regardless of output.

Competitors

Competitors are businesses or individuals that vie for the same customers or market share in the same industry.