A-level Paper 1, November 2021Markets and Business Behaviour
A-level Paper 1, November 2021, Q4(c)
Which one of the following conditions is necessary for revenue maximisation to occur?
Multiple choice1 mark
Context
Patrick Street Productions produces musicals. Its latest production is ‘It’s a Wonderful Life’ and the total cost of this production is $200 000. The ticket price is $40. The theatre has a capacity of 300 seats. The company aims for revenue maximisation. If this is achieved, revenue from ticket sales will cover 30% of total costs. Charitable donations contribute 12.5% towards total cost and a government subsidy ensures the production covers all of its costs.
AAverage revenue equals average cost
BAverage revenue equals marginal cost
CMarginal revenue equals average revenue
DMarginal revenue equals zero
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