When marginal cost is equal to marginal revenue, the firm should
A) produce more to increase profits.
B) produce less to decrease total costs.
C) stop producing additional units to maximize profits.
D) provide discounts to encourage purchases.
E) intensify distribution to increase sales.

Question

Quizplus · Accepted Answer

When marginal cost is equal to marginal revenue, the firm has reached the profit-maximizing level of production. Any additional unit produced would add more to the cost than the revenue generated, resulting in a reduction in overall profit. Therefore, the best choice for the firm is to stop producing additional units to maximize profits.

When Marginal Cost Is Equal to Marginal Revenue, the Firm