Which of the following is true?

Question

Quizplus · Accepted Answer

The objective of the firm is to maximize profits, by producing the amount that equates marginal revenue and marginal cost. This is because at the point where marginal revenue equals marginal cost, the firm is producing the optimal level of output that maximizes profit. Alternatively, if the firm produced more than this level, the cost of producing the additional unit (marginal cost) would exceed the revenue generated by selling that unit (marginal revenue), leading to a decrease in profit. Similarly, if the firm produced less than this level, the revenue generated by selling an additional unit (marginal revenue) would exceed the cost of producing it (marginal cost), meaning the firm isn't maximizing the total profit they could potentially make.

Which of the Following Is True