Question

A profit maximizing firm selects output such that A. average profit is maximized. B. total profit is maximized. C. marginal profit is maximized. D. Both A and B.

Answer 1

Answer:

B. total profit is maximized.

Explanation:

This is explained to be the long run or the short run process in which a firm is seen to determine the cost of sales revenue of the said firm this can be directly explained to be in the duration of a year. Economic models have explained to us that in various forms of market structure such as perfect competition, monopoly, monopolistic competition, microeconomic theory is seen to detail extensively the determination of price and output by assuming that firm’s aim is to maximise current or short run profits. This model of profit maximizing approach also are seen to directly select output on the basis that total output is maximized.