All profit- maximizing firms increase production up to the point at which the last unit of the variable factor employed adds
A) nothing to marginal cost.
B) nothing to marginal revenue.
C) just as much to revenue as to cost.
D) positive economic profits.
E) just as much to revenue as to profit.

Question

Quizplus · Accepted Answer

A profit-maximizing firm will continue to increase production up to the point at which the last unit of the variable factor employed adds just as much to revenue as to cost. This is because at this point, the firm is producing at the level where marginal cost equals marginal revenue, which maximizes profits.

All Profit- Maximizing Firms Increase Production Up to the Point