In Marginal Analysis, the Most Profitable Price Is the Price

question 127

Multiple Choice

In marginal analysis, the most profitable price is the price at which:

• A) Profit is based on competitive pricing.
• B) Total revenue and total cost are equal.
• C) The difference between total revenue and total cost is greatest.
• D) Total profit and total cost are equal.
• E) None of these is a good answer.

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Definitions:

S&P 500 Index

A market-capitalization-weighted index of 500 of the largest publicly traded companies in the U.S., used as a benchmark for the overall stock market performance.

Futures Price

The predetermined price agreed upon in a futures contract for the delivery of an asset at a future date.

Loss

A reduction in money or asset value, often the difference between purchase price and selling price if the latter is lower.

Normal Backwardation

A market condition in which the futures price is below the expected spot price, often occurring in markets expecting the price of the underlying asset to rise.