The profit maximizing level of output for the firm is whereSelected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.amarginal revenue (MR) exceeds marginal cost (MC) by the greatest possible amount.bmarginal revenue(MR) equals marginal cost (MC) for the last unit produced.caverage revenue (AR) equals average total cost (ATC) for the last unit produced.dmarginal revenue (MR) equals the minimum point of the average variable cost (AVC) curve.Question 9
Question
The profit maximizing level of output for the firm is whereSelected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.amarginal revenue (MR) exceeds marginal cost (MC) by the greatest possible amount.bmarginal revenue(MR) equals marginal cost (MC) for the last unit produced.caverage revenue (AR) equals average total cost (ATC) for the last unit produced.dmarginal revenue (MR) equals the minimum point of the average variable cost (AVC) curve.Question 9
Solution
The profit maximizing level of output for a firm is where marginal revenue (MR) equals marginal cost (MC) for the last unit produced. This is because when MR equals MC, it means that the revenue gained from selling one more unit of a product equals the cost of producing that additional unit. If MR is greater than MC, the firm can increase profit by producing more, and if MR is less than MC, the firm can increase profit by producing less. Therefore, the point where MR equals MC is the point where profit is maximized.
Similar Questions
A firm that sought to "maximize market share” would choose to produce an output level for which marginal revenue was equal toQuestion 5Select one:a.average cost.b.zero.c.marginal cost.d.price.
The figure below shows the marginal cost and average total cost curves for a perfectly competitive firm. If the market price is $10, thenSelected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.amarginal cost always equals marginal revenue for each unit sold.bthe firm earns $10 profit on each unit sold.cmarginal revenue equals $10.dthe firm earns $8 profit on each unit sold.
Using the following graph, what is the specific reason for why a profit-maximizing firm would not want to stop producing at 275 units of output?Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.amarginal cost (MC) would be less than marginal revenue (MR)bmarginal cost (MC) would equal average total cost (ATC)cprice would exceed average total cost (ATC)daverage revenue (AR) would exceed average total cost (ATC)
A company conducting business in a monopolistically competitive market will most likely maximise profits when its output quantity is set such that ______.Average cost is minimised.Marginal revenue equals average cost.Marginal revenue equals marginal cost.
In a perfectly competitive market, how does a firm determine its optimal level of output?By equating marginal cost to marginal revenueBy equating price to average total costBy equating price to average variable costBy equating average revenue to average total cost
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.