ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following must be true in order for a firm to earn economic profit?
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The firm’s price must be greater than its marginal cost.
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The firm’s marginal revenue must be greater than its marginal cost.
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The firm’s marginal revenue must be equal to its marginal cost.
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The firm’s total revenue must be greater than its total costs.
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The firm’s total revenue must be equal to its total costs.
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Explanation:
Detailed explanation-1: -Which of the following must be true in order for a firm to earn economic profit? The firm’s price must be greater than its marginal cost.
Detailed explanation-2: -Answer and Explanation: The answer is c. it equals total revenue minus total cost.
Detailed explanation-3: -Economics. When a firm’s total revenue is greater than its total economic costs, the firm is earning an economic profit. When TR is greater than TC the firm earns an economic profit and when TC is greater than TR firm earns an economic loss.
Detailed explanation-4: -A firm maximizes profits by creating a gap between revenue and costs.
There is 1 question to complete.