The competitive firm maximize profit when it produces output up to the point where ?
Correct answer: D. marginal cost equals marginal revenue
- A. price equals average variable cost
- B. marginal revenue equals average revenue
- C. marginal cost equals total revenue
- D. marginal cost equals marginal revenue
Explanation
Profit rises while the revenue from one more unit exceeds its cost, and falls when that cost is higher. The maximum occurs where marginal revenue equals marginal cost, provided production is worthwhile.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
In the short run, the competitive firm's supply curve is the portion of the marginal cost curve that lies above the average variable cost curve?
A grocery store should close at night if the ?
In the long-run some firms will exit the market if the price of the good offered for sale is less than ?
If a competitive firm doubles its output its total revenue ?
Which of the following is not a characteristic of a competitive market ?
In the long run in perfect competition ?