In a joint product problem with products produced in fixed proportions, profit would be maximized where MR_A + MR_B = MC, provided that neither MR_A nor MR_B is negative.

Question

Quizplus · Accepted Answer

This statement is true. In a joint product problem where products are produced in fixed proportions, the marginal rate of substitution (MRS) of one product for another will determine the relative profitability of that product. The optimal production quantities for each product will occur where the MRS of one product for another is equal to the marginal cost (MC) of producing an additional unit of that product. Therefore, the condition MR_A + MR_B = MC represents the optimal production condition for both products, assuming that both MRS values are positive.

In a Joint Product Problem with Products Produced in Fixed