Which of the following is TRUE?
A) Price times quantity equals profit.
B) Profit equals marginal revenue minus marginal cost.
C) Profit equals total revenue minus average cost.
D) Profit equals (price minus average cost) times quantity.

Question

Quizplus · Accepted Answer

The formula for calculating profit is (price minus average cost) times quantity, which is represented as P(Q) - AC(Q). This means that the profit earned from selling a certain quantity (Q) at a given price (P) is equal to the revenue earned (P times Q) minus the cost of producing that quantity (AC times Q). Therefore, option D is the true statement. Option A is incorrect because profit is not just a simple product of price and quantity. Option B is incorrect because it only represents the profit earned from selling one extra unit of a product, not the total profit earned. Option C is incorrect because it only considers the average cost, but not the actual cost of producing each individual unit.

Which of the Following Is TRUE