Profit Maximization Practice 1. Which of the following best describes a firm’s profit maximization rule? A. produce the quantity where price exceeds average variable cost by the greatest amount. B. produce the quantity where price is equal to the average total cost C. produce the quantity where marginal cost equals marginal revenue D. produce the quantity where marginal revenue exceeds marginal cost by the greatest amount. E. produce the quantity where average variable cost equals average total cost 2. Which of the following mathematical statements must be true if a firm is maximizing profit? A. MC (Q) = ATC (Q) B. MR (Q) = MC(Q) C. MR (Q) = ATC (Q) D. P < AVC (Q) E. P= ATC (Q) 3. If a firm is earning a positive economic profit, and it is maximizing that profit, what must be true? A. P= ATC(Q) and MR (Q) > MC (Q) B. P>ATC(Q) and MR (Q) = MC (Q) C. P< ATC(Q) and MR (Q) = MC (Q) D. P< ATC(Q) and MR (Q) < MC (Q) E. P> ATC(Q) and MR (Q) > MC (Q) 4. If profit is as high as possible and normal economic profits are being earned, which of the following is true? A. P= ATC(Q) and MR (Q) = MC (Q) B. P>ATC(Q) and MR (Q) = MC (Q) C. P< ATC(Q) and MR (Q) < MC (Q) D. P> ATC(Q) and MR (Q) > MC (Q) E. P= ATC(Q) and MR (Q) > MC (Q) Blammo produces and sells greeting cards. The marginal cost of producing different quantities of greeting cards, as well as the marginal revenue earned, is given in the table below.