Asked by blahh parker on Jun 18, 2024
Verified
When operating,the loss minimization point is
A) when at the minimum point on the average total cost curve.
B) when at the minimum point on the average variable cost curve.
C) where marginal cost equals marginal revenue.
D) when total revenue is maximized.
Loss Minimization
A strategy in economics and business focused on reducing the losses incurred by a firm or individual to the lowest possible level.
Average Total Cost
The total cost of production divided by the number of goods produced, representing the cost per unit of output.
Marginal Revenue
The additional income from selling one more unit of a good; it is the change in total revenue that comes from selling an additional unit.
- Outline the conditions under which an enterprise elects to maintain operation, suspend its operations, or relinquish its industry presence over short-term and long-term periods.
- Detail the application of marginal analysis in the pursuit of profit maximization and the curtailment of losses.
Verified Answer
RL
Rebeca LemusJun 21, 2024
Final Answer :
C
Explanation :
The loss minimization point occurs when the firm produces where marginal cost (MC) equals marginal revenue (MR). At this point, the firm is neither making a profit nor a loss, but rather breaking even. Choosing A or B would result in the firm continuing to operate at a loss, while choosing D would result in the firm operating at a level where profits are maximized, rather than minimizing losses.
Learning Objectives
- Outline the conditions under which an enterprise elects to maintain operation, suspend its operations, or relinquish its industry presence over short-term and long-term periods.
- Detail the application of marginal analysis in the pursuit of profit maximization and the curtailment of losses.