Which of the following statements is correct? A. The manger must produce at Q for which MR = MC since total costs are minimized at this level of production. B. The manger must produce at Q for which MR = MC since total profits are maximized at this level of production. C. The manger must produce at Q for which MR = MC since total benefits are maximized at this level of production. D. Profits from producing Q optinal are always higher than profits from Q > Q optimal, but less than profits from Q < Q optimal.
Which of the following statements is correct? A. The manger must produce at Q for which MR = MC since total costs are minimized at this level of production. B. The manger must produce at Q for which MR = MC since total profits are maximized at this level of production. C. The manger must produce at Q for which MR = MC since total benefits are maximized at this level of production. D. Profits from producing Q optinal are always higher than profits from Q > Q optimal, but less than profits from Q < Q optimal.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Which of the following statements is correct?
A. The manger must produce at Q for which MR = MC since total costs are minimized at this level of production.
B. The manger must produce at Q for which MR = MC since total profits are maximized at this level of production.
C. The manger must produce at Q for which MR = MC since total benefits are maximized at this level of production.
D. Profits from producing Q optinal are always higher than profits from Q > Q optimal, but less than profits from Q < Q optimal.
Expert Solution
Step 1
Let profit function is denoted by , revenue function is denoted by R(Q) and cost function is denoted by TC(Q)
We know that the profit is equal to total revenue minus total cost
..... (1)
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