Profits Are Maximized at the Output Level Where

question 74

Multiple Choice

Profits are maximized at the output level where:

• A)marginal revenue equals marginal cost.
• B)price equals average total cost.
• C)price is greater than marginal cost.
• D)marginal cost equals average total cost.

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Definitions:

Accounting Costs

Refers to expenses directly tied to the production of goods or services, such as labor, materials, and overhead costs.

Total Revenue

The overall amount of money generated by a business from its activities, typically from sales of goods or services before any expenses are deducted.

Marginal Cost Curves

A graphical representation showing how the cost of producing one additional unit of a good changes as production volume changes.

Law of Diminishing Returns

Law of Diminishing Returns states that in a production process, adding an additional factor of production, while holding all others constant, will at some point yield lower per-unit returns.