In which of the following cases will profit be maximized?
A) When marginal revenue is equal to marginal cost
B) When total cost is nearly equal to total fixed cost
C) When total revenue is nearly equal to total cost
D) When total variable cost is nearly equal to total fixed cost
E) When the break-even point is nearly equal to the average cost

Question

Quizplus · Accepted Answer

Profit is maximized when marginal revenue (MR) is equal to marginal cost (MC). This is because at this point, the last unit produced adds exactly as much revenue as it costs to produce it, leading to the highest possible profit. If MR is greater than MC, the firm can increase profit by producing more. If MR is less than MC, the firm can increase profit by producing less.

In Which of the Following Cases Will Profit Be Maximized