The optimal number of units to produce is best expressed when
A. marginal benefit exceeds marginal cost.
B. marginal cost exceeds marginal benefit.
C. marginal benefit and marginal cost are close to equal.
D. marginal benefit and marginal cost are equal to zero.
Answer: C
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Which of the following is a difference between a cartel and a monopoly?
a. A cartel will seek to decrease production in order to increase profits, whereas a monopoly will seek to increase production in order to increase profits. b. A cartel is a price taker, whereas a monopoly is a price setter. c. The members of a cartel each have an incentive to cheat on the agreed-upon quantity and price, whereas a monopoly has no such incentive. d. The members of a cartel sell homogeneous products, while a monopoly sells differentiated products.
A firm has $200 million in total revenue and explicit costs of $190 million. Suppose its owners have invested $100 million in the company at an opportunity cost of 10 percent interest rate per year. The firm's economic profit is:
a. $100 million. b. $400 million. c. $80 million. d. zero.