Which of the Following Statements Best Expresses a Firm's Profit-Maximizing

question 52

Multiple Choice

Which of the following statements best expresses a firm's profit-maximizing decision rule?

• A)If marginal revenue is greater than marginal cost, the firm should increase its output.
• B)If marginal revenue is less than marginal cost, the firm should decrease its output.
• C)If marginal revenue equals marginal cost, the firm should continue producing its current level of output.
• D)All of the above are correct.

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Definitions:

Price Rationing

The process of distributing goods and services by setting prices so that only those willing and able to pay will obtain them.

Future Output

The amount of goods and services that will be produced at a future date, often anticipated based on current trends and investments.

Excise Tax

A tax imposed on specific goods, such as alcohol and tobacco, usually to discourage consumption or generate revenue.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market balance.