To Maximize Its Profit, a Producer Should Set a Price

question 262

Multiple Choice

To maximize its profit, a producer should set a price (and produce that related output) where:

• A) marginal cost is just less than or equal to marginal revenue.
• B) marginal cost is at its minimum.
• C) price is as high as possible.
• D) total revenue equals total cost.
• E) marginal revenue is zero.

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Definitions:

Area

In mathematics, Area refers to the measure of the extent of a two-dimensional surface or shape, expressed in square units.

z

A standard score indicating how many standard deviations an element is from the mean in a normal distribution.

Standard Normal Random Variable

A random variable that is normally distributed with a mean of 0 and a standard deviation of 1.

P

Often used as shorthand for the p-value in statistical contexts, indicating the probability of observing certain results given a null hypothesis.