When output changes, the profit-maximizing firm must consider
A)only whether output price is affected.
B)only how much total revenue is affected.
C)the change in marginal cost only.
D)only how much total cost is affected.
E)how much both total cost and total revenue are affected.

Question

Quizplus · Accepted Answer

When output changes, the profit-maximizing firm must consider both total cost and total revenue. Changes in output can impact both variables, and the firm must weigh the potential increase in revenue against the potential increase in cost to determine whether the change will result in a net increase in profit. Ignoring either variable could lead to suboptimal decisions.

When Output Changes, the Profit-Maximizing Firm Must Consider