BUISENESS MANAGEMENT
BUSINESS PLANNING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Total revenue is greater than total costs
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Total revenue is less than total fixed costs
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Total revenue is greater than total variable costs
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Total revenue is less than total costs
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Detailed explanation-1: -When total revenue exceeds total cost, the firm earns an economic profit. Profit is maximized when the gap between total revenue and total cost is the largest, at 10 cans per day. Marginal analysis compares marginal revenue, MR, with marginal cost, MC.
Detailed explanation-2: -A price increase will therefore increase total revenue while a price decrease will decrease total revenue. Finally, when the percentage change in quantity demanded is equal to the percentage change in price, demand is said to be unit elastic. In this case, a price increase or decrease does not change total revenue.
Detailed explanation-3: -Total Revenue-Total cost = Profit.
Detailed explanation-4: -Total revenue for a perfectly competitive firm is an upward sloping straight line. The slope is equal to the price of the good. Total cost also slopes up, but with some curvature. At higher levels of output, total cost begins to slope upward more steeply because of diminishing marginal returns.