Question

a. Private firms seek to maximize (per unit profits , total profits , total revenue, or total costs)

b. The amount by which Total Cost rises when one more unit is produced is called the (total profit, total loss, marginal cost, or total revenue)

c. For firms in perfectly competitive markets, the amount by which the Total Revenue rises when one more unit is sold is called the (total cost marginal revenue, marginal cost, or marginal profit) , and this is equal to the (total cost , quantity of output total price or total profit) .

(each are fill in the blank and need one of the terms listed).

Answer 1

a. Private firms seek to maximize total profits. The aim of every profit seeking firm is to use all its available resources to produce output at a cost minimizing input mix so that profit can be maximized.

b. The amount by which Total Cost rises when one more unit is produced is called the marginal cost. This is the additional cost which is required to be compensated for when the same unit is sold in the market

c. For firms in perfectly competitive markets, the amount by which the Total Revenue rises when one more unit is sold is called the marginal revenue and this is equal to the total price

This is because for a firm price is fixed by the market and so the marginal revenue is always equal to price.