Which of the Following Statements Best Expresses a Firm's Profit-Maximizing

question 46

Multiple Choice

Which of the following statements best expresses a firm's profit-maximizing decision rule?

• A)If marginal revenue is greater than marginal cost, the firm should increase its output.
• B)If marginal revenue is less than marginal cost, the firm should shut down in the short run.
• C)If marginal revenue equals marginal cost, the firm should produce exactly one more unit of output.
• D)All of the above are correct.

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Definitions:

Government Spending

Government Spending encompasses all expenditure by government bodies and agencies, including investments, public services, and defense spending.

Aggregate Supply Curve

An illustrative depiction that exhibits the connection between total economic output and the general price level.

Real GDP

Real Gross Domestic Product measures the value of all final goods and services produced within a country's borders in a specific time period, adjusted for inflation.

Equation of Exchange

An economic formula representing the relationship between the money supply, its velocity, the price level, and the volume of transactions in an economy.