In the short run, a profit-maximizing firm will increase output until
A)marginal revenue equals marginal cost.
B)marginal cost equals total revenue.
C)total revenue equals total cost.
D)MCMR.

Question

In the short run, a profit-maximizing firm will increase output until
A)marginal revenue equals marginal cost.
B)marginal cost equals total revenue.
C)total revenue equals total cost.
D)MC>MR.

Quizplus · Accepted Answer

A profit-maximizing firm will increase output until marginal revenue (MR) equals marginal cost (MC) because at that point, the additional revenue generated by producing one more unit is equal to the additional cost incurred in producing it. This ensures that the firm is maximizing its profits by not producing at a point where the cost of producing an additional unit exceeds the revenue generated from it. Therefore, option A is the correct answer.

In the Short Run, a Profit-Maximizing Firm Will Increase Output