At the profit-maximizing level of output, the additional revenue to be gained from another unit of output must be equal to the additional cost the firm incurs by producing it.

Question

Quizplus · Accepted Answer

This statement is a fundamental principle of the theory of the firm under perfect competition assumptions. A firm will continue to produce as long as the marginal revenue equals or exceeds the marginal cost, which is the point of profit maximization.

At the Profit-Maximizing Level of Output, the Additional Revenue to Be