Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Identify total revenue → Identify total cost → Calculate profit → Determine optimal output
B
Calculate profit → Identify total cost → Identify total revenue → Determine optimal output
C
Determine optimal output → Identify total revenue → Calculate profit → Identify total cost
D
Identify total cost → Determine optimal output → Identify total revenue → Calculate profit
Understanding the Answer
Let's break down why this is correct
Answer
To find the optimal output level where total revenue exceeds total cost, you start by calculating total revenue, which is the price of the product multiplied by the number of units sold. Next, you need to determine total cost, which includes fixed costs (like rent) and variable costs (like materials and labor) for producing those units. Once you have both figures, you compare them to see if total revenue is greater than total cost. For example, if selling 100 toys at $10 each gives you a total revenue of $1,000, and your total cost to make those toys is $800, then you have a profit of $200. You continue adjusting the output levels until you find the maximum point where revenue still exceeds costs.
Detailed Explanation
First, you find total revenue, which is the money you earn. Other options are incorrect because This option starts with profit, but you need to know revenue and cost first; This option jumps to determining output before knowing revenue and cost.
Key Concepts
Total Revenue
Total Cost
Profit Maximization
Topic
Finding Optimal Choices
Difficulty
easy level question
Cognitive Level
understand
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