When marginal revenue equals marginal cost:

Question

Quizplus · Accepted Answer

When marginal revenue equals marginal cost, the firm is operating at its profit-maximizing level of output. At this level, the firm is not generating economic profits, but it is not necessarily generating economic losses either. The firm may still be able to cover its variable costs and some portion of its fixed costs, leading to losses being minimized rather than profits being maximized. Therefore, the correct answer is D.

When Marginal Revenue Equals Marginal Cost