Question

Which of the following statements about marginal analysis is true?

A) Marginal analysis is typically a straightforward procedure to apply in real-life situations.
B) An important factor in marginal analysis is predicting demand, which is an exact science.
C) Marginal revenue is also the demand curve, so it represents the amount customers will buy at different prices.
D) Profit is maximized at the point at which marginal cost is exactly equal to marginal revenue.
E) The cost of producing a unit beyond the point when marginal cost equals marginal revenue is much less than the revenue from the sale of that unit.

Answer 1

Profit is maximized at the point at which marginal cost is exactly equal to marginal revenue. The correct option is D.

Step-by-step explanation:

Out of the given options, the statement that is true about marginal analysis is D) Profit is maximized at the point at which marginal cost is exactly equal to marginal revenue.

Marginal analysis is an important concept in economics and is used to determine the level of output that maximizes profit for a firm.

It involves comparing the marginal cost of producing an additional unit of a good or service to the additional revenue gained from selling that unit.

When marginal cost equals marginal revenue, it means that the additional cost of producing one more unit is equal to the additional revenue generated from selling that unit, resulting in maximum profit for the firm. The correct option is D.