Introduction to Economics 1 Deneme Sınavı Sorusu #1397545
What is the objective of a firm that produces a good or service in a market?
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to maximize its profit, which is the difference between total revenue and total cost. |
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to maximize its total revenue, which is the price times quantity. |
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to maximize its profit, which is the difference between total revenue and average cost. |
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to maximize its profit, which is the difference between average revenue and marginal cost. |
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to maximize its profit, which is the difference between marginal revenue and marginal cost. |
PRODUCTION, COST AND PROFIT
The objective of a firm that produces a good or service is to maximize its profit, which is the difference between total revenue and total cost. For profit maximization, the firm has to decide how much output to produce or supply along with the amount of each input needed to produce that particular level of output. When producing a given level of output, the firm chooses the amount of different inputs in a way that minimizes the production cost of that particular level of output.
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