Asked by Tequila Barnes on Jul 06, 2024
Verified
Marginal profit is negative when:
A) marginal revenue is negative.
B) total cost exceeds total revenue.
C) output exceeds the profit-maximizing level.
D) profit is negative.
Marginal Profit
Marginal profit refers to the additional profit a company gains from selling one more unit of a good or service.
Marginal Revenue
The additional income gained by selling one more unit of a product or service.
Total Cost
The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.
- Detail the interaction between total revenue, total cost, marginal revenue, and marginal cost as it pertains to profit maximization efforts.
Verified Answer
HP
Hareesh PadmanabhaJul 09, 2024
Final Answer :
C
Explanation :
Marginal profit becomes negative when the cost of producing an additional unit exceeds the revenue generated from selling that unit, which typically occurs when production exceeds the profit-maximizing level.
Learning Objectives
- Detail the interaction between total revenue, total cost, marginal revenue, and marginal cost as it pertains to profit maximization efforts.