Profit for the firm is maximized when the firm produces the level of output where MR = MC.

Question

Quizplus · Accepted Answer

This statement is true according to the profit-maximizing rule of MR=MC. At the point where the marginal revenue (MR) of producing an additional unit of output equals the marginal cost (MC) of producing that unit, the firm achieves maximum profit. If the firm produces beyond this level, MC will exceed MR, causing the firm to experience losses, and if the firm produces below this level, it will miss out on potential revenue. Therefore, by setting output where MR=MC, the firm attains the highest level of profit.

Profit for the Firm Is Maximized When the Firm Produces