AP Microeconomics 3.5 Profit Maximization Questions
Find the output that maximizes profit by comparing marginal revenue with marginal cost and total revenue with total cost.
- Syllabus
- Effective Fall 2022
- Course
- AP Microeconomics
Exam points
- apply the MR = MC rule and use marginal inequalities to increase or reduce output
- calculate marginal values from total revenue and cost schedules before choosing quantity
- select the quantity where the gap between total revenue and total cost is greatest
- explain why changing fixed cost changes profit but leaves the optimal output unchanged
Covered syllabus points
Question 1
[Maximum number: 1]
Which of the following is true of all profit-maximizing firms, regardless of the type of competition they face?
A
Firms will produce the quantity where price equals marginal cost.
B
Firms will produce the quantity where price equals marginal revenue.
C
Firms will produce the quantity where price equals average total cost.
D
Firms will produce the quantity where marginal cost equals average total cost.
E
Firms will produce the quantity where marginal cost equals marginal revenue.
E
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