Asked by
Astrid Gonzalez
on Dec 12, 2024
Verified
In the short run, a price searcher wishing to maximize profits or minimize losses should produce the output that
A) equates marginal cost with marginal revenue.
B) equates marginal cost with price.
C) corresponds to the lowest point on the average variable cost curve.
D) corresponds to the lowest point on the average total cost curve.
Marginal Revenue
Extra profit generated from the sale of one more unit of a product or service.
Marginal Cost
The additional cost incurred to produce one additional unit of a good or service.
Average Variable Cost
The variable cost of production (costs that change with output level) divided by the quantity of output produced.
- Explain the role of marginal revenue and marginal cost in profit maximization for price-searching firms.
Verified Answer
SL
Learning Objectives
- Explain the role of marginal revenue and marginal cost in profit maximization for price-searching firms.