Profit can be maximized only where marginal revenue equals
A)average cost.
B)total cost.
C)marginal cost.
D)average cost

Question

Quizplus · Accepted Answer

To maximize profit, a firm must produce at the point where marginal revenue (MR) equals marginal cost (MC). This is because at this point, producing one more unit will add the same amount of revenue as it will cost, meaning that there is no further gain to be made in terms of profit. The point where average cost (AC) equals MR is not relevant to profit maximization, as this only indicates where the firm can produce at minimum cost. Similarly, total cost (TC) and average cost (AC) are not directly relevant to profit maximization, as these do not take into account the revenue earned from each unit produced.

Profit Can Be Maximized Only Where Marginal Revenue Equals