In economics,maximization of the total profit of an activity occurs when: A)MB = MC. B)MB MC. C)MB

Question

In economics,maximization of the total profit of an activity occurs when:
A)MB = MC.
B)MB > MC.
C)MB < MC.
D)MB approaches MC.

Quizplus · Accepted Answer

Maximization of profit occurs when the additional or marginal benefit (MB) of producing one more unit of output is equal to the additional or marginal cost (MC) of producing that unit. This is known as the principle of marginal analysis or the equimarginal principle. When MB = MC, the resources are allocated efficiently and the total profit is maximized. Therefore, option A is the best choice.

In Economics,maximization of the Total Profit of an Activity Occurs