Assertion (A): A firm is in equilibrium where its total revenue is at its maximum.
Reason (R): Profit is total revenue minus total cost.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

A is false: maximum TR ignores cost; the firm wants maximum TR − TC.
R is true and shows why A is wrong.

Concept: Maximum TR is not maximum profit
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsProducer's equilibrium: MC = MR

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Ten questions from Revenue & Producer's Equilibrium, at your own pace.

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Ten questions from Revenue & Producer's Equilibrium, at your own pace.

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Assertion (A): A firm is in equilibrium where its total revenue is at its maximum.Reason (R): Profit is total revenue minus total cost.

Explanation

Assertion (A): A firm is in equilibrium where its total revenue is at its maximum.
Reason (R): Profit is total revenue minus total cost.