In maximizing bank profitability, all of the following are required EXCEPT:
A) global minimization of total costs
B) global maximization of total revenues
C) marginal total costs equal marginal total revenues
D) average total costs equal average total revenues

Question

Quizplus · Accepted Answer

The correct principle for maximizing profitability is to ensure that marginal total costs equal marginal total revenues (C), not that average total costs equal average total revenues (D). This is because profitability is maximized at the point where the cost of producing one more unit (marginal cost) is exactly equal to the revenue gained from selling that one more unit (marginal revenue). Averages do not provide this precise decision-making information.

In Maximizing Bank Profitability, All of the Following Are Required