At the Level of Output Where Marginal Revenue Equals Marginal

question 48

Multiple Choice

At the level of output where marginal revenue equals marginal cost,price is less than average total cost but greater than average variable cost.In this instance,a profit-maximizing firm should:

• A) cease production as it is incurring an economic loss.
• B) continue operating at that output level in the short term, since total revenue will cover all of the firm's variable costs and some of its fixed costs.
• C) continue operating at that output level in the short term, since total revenue will cover all of the firm's fixed costs and a portion of its variable costs.
• D) decrease output to where marginal revenue exceeds marginal cost by the greatest dollar amount.

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Definitions:

Lev Vygotsky

A prominent Russian psychologist known for his work on cognitive development, particularly the concept of the zone of proximal development.

Basic Trust

A sense of trust or confidence in the world and in oneself, developed in early childhood as a result of consistent and reliable caregiving.

Concrete Operational

A phase in Piaget’s cognitive development theory when children develop the capability to logically process information about tangible occurrences.

Logical Thinking

The process of reasoning consistently and drawing conclusions based on a systematic analysis of information.