In the short run, the profit maximizing (or minimizing) quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.

Question

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This is a basic principle of microeconomics and is known as the "profit maximization rule." At the quantity at which marginal revenue equals marginal cost, a firm has reached its highest possible profit. If it were to produce any more or less than this quantity, its profit would be lower.

In the Short Run, the Profit Maximizing (Or Minimizing) Quantity