A Profit-Maximizing Firm in the Short Run Will Expand Output

question 124

Multiple Choice

A profit-maximizing firm in the short run will expand output:

• A) until marginal cost begins to rise.
• B) until total revenue equals total cost.
• C) until marginal cost equals average variable cost.
• D) as long as marginal revenue is greater than marginal cost.

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Definitions:

Profit-Maximizing Quantity

The production level where a firm reaches its maximum profit.

Monopoly Model

An economic model describing a market structure where a single seller controls the entire market supply, setting prices without competition.

Point

An exact location in space, defined by coordinates or a descriptor, but without any dimensions, area, volume, or length.

MR = MC

The condition where marginal revenue equals marginal cost, often used as the profit maximization point for firms in microeconomics.