Asked by
Lexie Temple
on Oct 27, 2024Verified
The profit-maximizing rule MR = MC is:
A) followed by a monopoly but not by a perfectly competitive firm.
B) followed by a perfectly competitive firm but not by a monopoly.
C) followed by all types of firms.
D) not followed by a monopoly because it would reduce economic profit to zero.
Profit-Maximizing Rule
A principle stating that profit maximization occurs when a firm expands output until marginal cost is equal to marginal revenue.
MR = MC
The condition for profit maximization in economic theory, where marginal revenue (MR) equals marginal cost (MC).
Economic Profit
The discrepancy across total turnover and total spendings, including expenses both explicit and implicit.
- Examine the rules for maximizing profits in both monopolistic and perfectly competitive businesses.
Verified Answer
KP
Learning Objectives
- Examine the rules for maximizing profits in both monopolistic and perfectly competitive businesses.