Asked by Clayton Kinzel on Jun 08, 2024
Verified
To find the output at which the firm maximizes its profits you MUST know the firm's
A) ATC.
B) AVC.
C) AFC.
D) MC.
Average Total Cost (ATC)
The sum of all the production costs divided by the quantity of output produced, representing the per unit cost of production.
Average Variable Cost (AVC)
The total variable costs of production divided by the quantity of output produced, indicating the average cost of producing each unit excluding fixed costs.
Marginal Cost (MC)
The expense incurred from manufacturing an extra unit of a product or service.
- Elucidate the significance of marginal analysis for the enhancement of profits and reduction of losses.
- Assess the effects of cost curves and market price on the determination of output.
Verified Answer
CS
Chandler SmithersJun 09, 2024
Final Answer :
D
Explanation :
To find the output at which the firm maximizes its profits, we need to know the marginal cost (MC). This is because profit maximization occurs where MC equals marginal revenue (MR), or where MC = MR.
Learning Objectives
- Elucidate the significance of marginal analysis for the enhancement of profits and reduction of losses.
- Assess the effects of cost curves and market price on the determination of output.