A profit-maximizing firm always
A)sells its output at P = MC.
B)produces at the output at which MR is maximized.
C)hires labor until the MRP of labor

Question

A profit-maximizing firm always
A)sells its output at P = MC.
B)produces at the output at which MR is maximized.
C)hires labor until the MRP of labor < 0.
D)finds the output where marginal profit is zero.

Quizplus · Accepted Answer

Marginal profit is the additional profit from producing one more unit, and it becomes zero at the profit-maximizing level of output because at this point, marginal cost (MC) equals marginal revenue (MR). This is the condition for profit maximization in perfectly competitive markets.

A Profit-Maximizing Firm Always