A firm that maximizes its profits by producing a certain level of output must also
A) minimize its cost of producing that output.
B) maximize its output.
C) minimize its variable costs.
D) maximize its sales.
E) maximize its revenue.

Question

Quizplus · Accepted Answer

In order to maximize profits, a firm must produce the level of output where marginal revenue equals marginal cost. This level of output also happens to be the point where the firm's cost of producing that output is minimized. Therefore, choice A is the correct answer. Choices B, C, D, and E do not necessarily lead to profit maximization in and of themselves.

A Firm That Maximizes Its Profits by Producing a Certain