To find its profit-maximizing output level, a firm should operate where
A)AVC = MC.
B)MC = MR.
C)TFC = TVC.
D)AFC = AVC.

Question

Quizplus · Accepted Answer

The profit-maximizing output level occurs where marginal revenue (MR) equals marginal cost (MC). At this point, the firm is producing the optimal amount of output where the additional revenue gained from producing one extra unit (MR) is equal to the additional cost of producing that unit (MC). This ensures that the firm is maximizing its profits.

To Find Its Profit-Maximizing Output Level, a Firm Should Operate