Profit maximization occurs at the quantity where marginal cost equals marginal revenue.

Question

Quizplus · Accepted Answer

Profit is defined as total revenue minus total cost. In order to maximize profit, a firm must produce the quantity where marginal revenue is equal to marginal cost. This is because at this point, the additional revenue gained from producing one more unit is equal to the additional cost of producing that unit, resulting in the highest possible profit for the firm. Therefore, profit maximization occurs at the quantity where marginal cost equals marginal revenue, making statement A true.

Profit Maximization Occurs at the Quantity Where Marginal Cost Equals