The firms long run output decision will be where ?
Correct answer: C. marginal revenue equals long run marginal cost
- A. long run average cost is lowest
- B. marginal revenue equals output
- C. marginal revenue equals long run marginal cost
- D. marginal cost equals output
Explanation
A firm chooses its long-run profit-maximizing output where marginal revenue equals long-run marginal cost, provided production is worthwhile. The other choices compare revenue or cost with output, which are not equivalent measures.
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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.
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