Question

Statement 1: Price is equal to total revenue divided by output. Statement 2: A firm never maximizes profits. (LO3) a) Statement 1 is true, and statement 2 is false. b) Statement 2 is true, and statement 1 is false. c) Both statements are true. d) Both statements are false.

Name: Problem 9, Chapter 21: Economics
Uploaded: 2023-03-13T06:32:50-08:00
Duration: 3 min 11 s
Channel: Jennifer Stoner
Description: Statement 1: Price is equal to total revenue divided by output. Statement 2: A firm never maximizes profits. (LO3) a) Statement 1 is true, and statement 2 is false. b) Statement 2 is true, and statement 1 is false. c) Both statements are true. d) Both statements are false.

    Statement 1: Price is equal to total revenue divided by output. Statement 2: A firm never maximizes profits. (LO3)
a) Statement 1 is true, and statement 2 is false.
b) Statement 2 is true, and statement 1 is false.
c) Both statements are true.
d) Both statements are false.

Economics

Stephen L. Slavin 10th Edition

Chapter 21, Problem 9

Instant Answer

Solved by Expert Jennifer Stoner

03/13/2023

Step 1

This statement is true. Total revenue is the amount of money a firm receives from selling its output, and when you divide this by the number of units sold (output), you get the price per unit. Statement 2: A firm never maximizes profits. This statement is false. Show more…

Show all steps

Thanks for your feedback!

Statement 1: Price is equal to total revenue divided by output. Statement 2: A firm never maximizes profits. (LO3) a) Statement 1 is true, and statement 2 is false. b) Statement 2 is true, and statement 1 is false. c) Both statements are true. d) Both statements are false.

Play audio

Feedback

Jennifer Stoner and 59 other educators are ready to help you.

Ask a new question

Labs

Want to see this concept in action?

NEW

Explore this concept interactively to see how it behaves as you change inputs.

View Labs

Key Concepts

Profit Maximization

Profit maximization is the principle that firms aim to achieve the highest possible profits by choosing optimal production levels. This is typically done by setting output where marginal revenue equals marginal cost. Economic theory assumes firms will pursue strategies that maximize profit, making the idea of a firm never maximizing profits inconsistent with this objective.

Price Determination

This concept refers to calculating the selling price of a good or service by dividing the total revenue earned by the quantity of output sold. In competitive markets, price is often taken as given, and determining it using the total revenue per unit produced serves as a basic measure for revenue analysis.

Please give Ace some feedback