The Profit-Maximizing Rule MR = MC Is

question 210

Multiple Choice

The profit-maximizing rule MR = MC is:

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

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Definitions:

Contribution Margin

The difference between a company's sales revenue and variable costs, indicating the amount available to cover fixed costs and generate profit.

Fixed Expenses

Expenses that remain constant regardless of the amount of output or sales, including items like lease payments, wages, and insurance costs.

Net Income

The net income of a company, which is calculated by deducting all costs and taxes from its total earnings.

Break-Even Point

The production level or sales volume at which total revenues equal total expenses, resulting in no net loss or gain.