The Profit-Maximizing Rule MR = MC Is

question 29

Multiple Choice

The profit-maximizing rule MR = MC is:

• A) followed by a monopoly, but not a perfectly competitive firm.
• B) followed by a perfectly competitive firm but not by a monopoly.
• C) followed by any firm.
• D) not followed by a monopoly, because it would reduce economic profit to zero.

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Definitions:

Metal Alloy

A substance composed of two or more metals or a metal and a non-metal, mixed together to attain desired physical or chemical properties.

Fixed Proportions

A production technology assumption where inputs must be used in constant, unchanging ratios to produce outputs.

Average Cost

The total cost of production divided by the number of units produced, representing the cost per unit of output.

Production Function

An equation that specifies the output that can be produced with different combinations of inputs or factors of production.