When economic profit is zero, only normal profit is earned.

Assume that marginal revenue equals rising marginal cost at 100 units of output. At this output level, a profit-maximizing firm’s total fixed cost is $600 and its total variable cost is $400. If the price of the product is $10 per unit and the firm produces 100 units, the firm will earn an economic profit of

Marginal cost and average total cost curves in the short run are similar in that they are U-shaped.

Which of the following may be fixed in the short run?

Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that the firm is earning a normal profit.

Figure 5.2Refer to Figure 5.2. If the firm is producing Q3 units of output, we know that the firm

The MC = MR rule is widely known in the company’s management, and written in the operations manuals.

The objective for a firm is to maximize total revenue.

Figure 5.1Refer to Figure 5.1. If the current production level is 90 and the firm wishes to maximize profit, it should

Table 5.2Table 5.2Quantity of OutputTotal Fixed CostTotal Variable Cost12345678$40$40$40$40$40$40$40$40$  30$  44$  60$  80$110$150$200$280In Table 5.2, marginal cost is largest for the