Question

What is the method to calculate short-run equilibrium output in economics?

A) Marginal Cost equals Marginal Revenue
B) Average Total Cost equals Average Revenue
C) Marginal Revenue equals Average Total Cost
D) Marginal Cost equals Average Variable Cost

Answer 1

The method to calculate short-run equilibrium output in economics is Average Total Cost equals Average Revenue.

Step-by-step explanation:

The method to calculate short-run equilibrium output in economics is option B) Average Total Cost equals Average Revenue.

In the short run, firms aim to maximize their profits. They can determine the equilibrium output level by ensuring that their average total cost (ATC) is equal to their average revenue (AR) or price.

This means that at the short-run equilibrium, the firm is producing the level of output where its costs are equal to its revenue, resulting in maximum profit.