Scenario 9.2
Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments.
-A firm will always maximize profit at the level of output where average total costs are minimized.

Question

Quizplus · Accepted Answer

A firm maximizes profit where marginal revenue equals marginal costs, not necessarily where average total costs are minimized. Profit maximization can occur at output levels different from where average total costs are minimized, depending on the market structure and demand conditions.

Scenario 9.2 Consider a Publicly Held Firm (One Whose Stock Shares Are