According to the Rule for Maximizing Profit, the Highest Profit

question 146

Multiple Choice

According to the rule for maximizing profit, the highest profit is earned at the price where

• A) average cost is just less than or equal to marginal revenue.
• B) average cost is just less than or equal to average revenue.
• C) total revenue is just greater than total costs.
• D) marginal cost is just less than or equal to marginal revenue.
• E) total revenue is equal to total costs.

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Definitions:

Inferior Good

A type of good for which demand decreases as the income of consumers increases, inversely related to the economic well-being of consumers.

College Tuition

The fee that students pay to attend a college or university, covering costs such as instruction, facilities, and sometimes room and board.

Supply

The total amount of a specific good or service that is available to consumers at a given price level and time.

Elastic

Describing a situation where the demand or supply for a good or service is sensitive to changes in price.