Profit is maximized when which of the following conditions occurs?
a. Total revenue equals total cost.
b. Average revenue equals average cost.
c. Marginal revenue equals marginal cost.
d. Both b. and c. above are correct.
c
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Assuming the same sized substitution effect, normal goods have steeper cross-price demand curves than inferior goods.
Answer the following statement true (T) or false (F)
Use the following graph, which shows the aggregate demand and aggregate supply schedule for a hypothetical economy, to answer the next question.Real Domestic Output Demanded (in billions)Price Level (index value)Real Domestic Output Supplied (in billions)$500350$3,5001,0003003,0001,5002502,5002,0002002,0002,5001501,5003,0001001,000If the quantity of real domestic output demanded decreased by $500 and the quantity of real domestic output supplied increased by $500 at each price level, the new equilibrium price level and quantity of real domestic output would be ________.
A. 250 and $2,000 B. 200 and $2,000 C. 150 and $1,500 D. 150 and $2,000
Normative economics answers the question, "What ought to be?" Positive economics predicts the consequences of alternative actions, answering the questions, "What is?" or "What will be?"
Answer the following statement true (T) or false (F)
A balance sheet
A) measures flows of income and expenditure over a given period of time. B) measures assets, liabilities, and net worth at a giving instance in time. C) equates flows of revenue with flows of expenditure. D) None of the above are correct.