Multiple Choice
Which of the following actions will ordinarily improve a firm's profit margin and return on investment (ROI)?
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10. The Costs of Production
Revenue, Cost, and Profit
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When a firm has a loss, the total revenue is _____ than the total cost.
A
less
B
equal
C
double
D
greater
Verified step by step guidance1
Understand the definitions: Total Revenue (TR) is the total amount of money a firm receives from selling its goods or services, while Total Cost (TC) is the total expense incurred in producing those goods or services.
Recall the concept of profit or loss: Profit occurs when Total Revenue exceeds Total Cost, and a loss occurs when Total Revenue is less than Total Cost.
Analyze the condition for a loss: If a firm experiences a loss, it means the money earned from sales (TR) is not enough to cover the expenses (TC).
Express this relationship mathematically: For a loss, Total Revenue is less than Total Cost, which can be written as \(TR < TC\).
Conclude that when a firm has a loss, the total revenue is less than the total cost.
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