Asked by David Williams on Jul 05, 2024
Verified
A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating
A) price and average total cost.
B) price and average fixed cost.
C) marginal revenue and marginal cost.
D) price and marginal revenue.
Profit-maximizing
The process of adjusting production and sales to achieve the highest possible profit levels, often by analyzing costs and revenues.
Marginal Cost
The extra expense associated with manufacturing an additional unit of a product or service.
- Identify and evaluate strategies for achieving the highest profits in entirely competitive industries.
Verified Answer
FN
Faith NaylorJul 11, 2024
Final Answer :
C
Explanation :
Marginal revenue and marginal cost are equated to determine the profit-maximizing or loss-minimizing output for a competitive firm in the short run. This principle applies because when the cost of producing one more unit (marginal cost) equals the revenue gained from selling that unit (marginal revenue), profit is maximized.
Learning Objectives
- Identify and evaluate strategies for achieving the highest profits in entirely competitive industries.