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AP® Microeconomics

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Vinny's wheat farm

APMICR-91WVXF

Vinny the farmer is trying to maximize his profits for producing wheat. His neighbor Brenda, an economist, informs him that profit will be maximized when the Marginal Revenue of the next bushel of wheat he produces equals the Marginal Cost of producing that bushel (the $MR=MC$ rule).

The $MR = MC$ rule can be restated for perfectly competitive sellers like Vinny as $P = MC$ because

A

Vinny’s average revenue curve is downsloping.

B

since price is the same for every unit produced, every unit produced adds its price exactly to total revenue.

C

Vinny’s marginal revenue and total revenue curves will coincide.

D

the market demand curve is downsloping.

E

since price is the same for every unit produced, every unit produced has the same production costs.