Average profit is maximized where the difference between average revenue and average cost is the greatest possible amount.

Question

Quizplus · Accepted Answer

This is the definition of the profit-maximizing point according to microeconomic theory. At this point, the firm is producing the quantity of goods where marginal revenue equals marginal cost, leading to the highest possible level of profit. This quantity is also where the difference between average revenue and average cost is the greatest.

Average Profit Is Maximized Where the Difference Between Average Revenue