Micro - πmax

What is profit defined as?

• π = TR - TC

• π = AFC - ATC

• π = TR

• The cost of producing one unit of a good or service

How is total revenue calculated in a perfect competition scenario?

• P X Q
• P - Q
• P + Q
• P divided by Q

What is the profit maximizing rule?

• Marginal revenue = marginal cost
• Fixed costs are minimized
• Production quantity is maximized
• TR = TC

What is profit?

• π = TR − TC

• The amount of revenue earned.
• Total revenue minus total cost.
• The total cost of production.

What is total revenue?

• Price times quantity.
• The sum of all costs incurred.
• The amount earned after subtracting costs.
• Total cost minus total profit.

What does profit maximization entail?

• Choosing the level of output at which marginal revenue equals marginal cost.
• Increasing output continuously.
• Selecting the output level that generates the highest revenue.
• Minimizing costs at all levels of output.

When does a firm maximize profit?

• When marginal revenue equals marginal cost.
• At any level of output.
• When total cost is minimized.
• When total revenue exceeds total cost.

What happens if marginal revenue is greater than marginal cost?

• Profits are still rising and output should be increased.
• Output should be decreased.
• Profits are at their maximum.
• There are losses.

What should a firm do if marginal revenue is less than marginal cost?

• Output should be reduced until marginal revenue equals marginal cost.
• Seek external funding.
• Exit the market.
• Increase output continuously.

What is the profit at output levels Q1 and Q2?

• Zero.
• Positive.
• Negative.
• Varied.