Question
Asked Oct 16, 2019
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Refer to the table. If seven barrels of oil are produced, this firm is making:
 
  a profit because MR > MC.
  a loss because TR < TC.
  a profit because P >AC.
  a loss because MC > AC.
Marginal
Marginal
Barrel of Oil
Average
Revenue
$50
Produced
Cost
Costs
$34
1
$4
2
50
6
40
50
50
17
3
11
17
17
4
50
23
18.20
6
50
29
20
50
50
7
36
22.29
8
50
25.75
9
50
90
32.89
10
50
124
42
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Marginal Marginal Barrel of Oil Average Revenue $50 Produced Cost Costs $34 1 $4 2 50 6 40 50 50 17 3 11 17 17 4 50 23 18.20 6 50 29 20 50 50 7 36 22.29 8 50 25.75 9 50 90 32.89 10 50 124 42

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Expert Answer

Step 1

If seven barrels of oil are produced, this firm is making: Profit as MR>MC – It is true as the firm is gaining more revenue than its cost

Step 2

TR<TC – False as TR>TC at 7 units

P>AC – It is false as p...

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Business

Economics

Cost of production

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