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Revenue, Cost, and Profit quiz #1

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  • Which of the following conditions are true when a firm is maximizing its profits?
    A firm maximizes profit when the difference between total revenue and total cost is at its greatest possible value.
  • If a firm produces 5 units that it sells for $39.00 each, what is its total revenue?
    Total revenue equals price times quantity, so 5 units × $39.00 = $195.00.
  • Assume the quantity produced per month (qpm) is 100 units. What is your total revenue if the price per unit is known?
    Total revenue equals price per unit multiplied by quantity, so if price is P, total revenue = 100 × P.
  • How do companies determine the most profitable way to operate?
    Companies compare total revenue and total cost, seeking to maximize the difference (profit) by adjusting output and managing costs.
  • What happens if both revenue and cost remain constant for a firm?
    If revenue and cost remain constant, profit will also remain constant, assuming no changes in other factors.
  • When a firm has a loss, the total revenue is less than the total cost.
    A firm experiences a loss when its total revenue is less than its total cost.
  • For a firm, profit equals total revenue minus total cost.
    Profit is calculated as total revenue minus total cost.
  • To calculate profit, producers subtract their total production cost from their total revenue.
    Profit equals total revenue minus total production cost.
  • To calculate profit, producers subtract their total production cost from their total revenue.
    Profit equals total revenue minus total production cost.
  • If a firm produces 5 units that it sells for $39.00 each, what will its profits or losses equal if total cost is known?
    Profit or loss equals total revenue ($195.00) minus total cost. If total cost is less than $195.00, there is a profit; if more, a loss.
  • The profit that a factor earns is the difference between total revenue and total cost.
    Profit is the difference between total revenue earned and total cost incurred.
  • The profit equation is:
    Profit = Total Revenue – Total Cost.
  • Economic profits are calculated by subtracting both explicit and implicit costs from total revenue.
    Economic profit = Total Revenue – Explicit Costs – Implicit Costs.
  • How is profit calculated in microeconomics, and what is the difference between accounting profit and economic profit?
    Profit is calculated as total revenue minus total cost. Accounting profit is total revenue minus explicit costs (direct monetary expenses), while economic profit is total revenue minus both explicit and implicit costs (including opportunity costs).