Refer to Figure 22.3 at Quantity Level B

question 33

Multiple Choice

Refer to Figure 22.3 At quantity level B

• A)The company is maximizing profit.
• B)Marginal cost is greater than marginal revenue, so it should cut production.
• C)The company is minimizing loss.
• D)Marginal revenue is greater than marginal cost, so the firm should expand production.

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Definitions:

Market Price

The present cost at which a good or service can be purchased or sold in the market.

Profit-Maximizing Firm

A company that chooses its level of output and pricing strategy to achieve the highest possible profit based on its costs and the market demand.

Price Elasticity Of Demand

A measure in economics indicating how the quantity demanded of a good changes in response to a change in its price.

Marginal Cost

The increase in total cost that arises from an increase in the production of one additional unit of a good or service.