Suppose that a firm produces where MR = MC. To guarantee that the firm is maximizing its profit, confirm that the _____ derivative of the profit function is _____.

Question

Quizplus · Accepted Answer

For a firm to be maximizing its profit, the condition MR = MC must be met at the point where the second derivative of the profit function is negative. This indicates that the profit function is concave down at that point, confirming a local maximum in terms of profit.

Suppose That a Firm Produces Where MR = MC