According to Economic Theory, Profits Are Maximized at the Rate

question 1

Multiple Choice

According to economic theory, profits are maximized at the rate of output where

• A)price equals total revenue.
• B)marginal revenue equals marginal cost.
• C)economic profits are zero.
• D)price and marginal revenue are equal.

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Definitions:

Equilibrium Outcome

A state in which market supply and demand balance each other, and, as a result, prices become stable.

Economic Rent

The excess payment made to a factor of production over and above what is needed to keep it in its current use, often due to unique circumstances.

Marginal Worker

An individual whose employment status is unstable or insecure, often at the fringes of the labor market.

Reservation Wage

The minimum wage at which an individual would be willing to accept for a particular job, below which they would choose not to work.