Assuming price is greater than long-run average cost in the long run, the firm will maximize profit if:

Question

Quizplus · Accepted Answer

In the context of profit maximization, a firm will maximize profit when marginal profit is zero, which occurs when marginal cost equals marginal revenue. Option A correctly states that profit maximization occurs when marginal profit is zero and marginal revenue is below marginal cost at higher output levels, indicating that the firm should not increase output further as it would reduce profit.

Assuming Price Is Greater Than Long-Run Average Cost in the Long