If a firm equates MR and MC, then:
A. TR is at a maximum, and TC is at a minimum.
B. output is at a maximum.
C. both TR and TC are at a maximum.
D. profits are at a maximum or losses are at a minimum.
Answer: D
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Which of the following statements about the circular-flow diagram is correct?
a. One must imagine that the economy operates without money in order to make sense of the diagram. b. The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. c. The government cannot be excluded as a decision maker in a circular-flow diagram. d. All of the above are correct.
Refer to the diagram. This firm's demand and marginal revenue curves are based on the assumption that:
A. the firm has no immediate rivals.
B. rivals will match both a price increase and a price decrease.
C. rivals will match a price increase but ignore a price decrease.
D. rivals will ignore a price increase but match a price decrease.