It's logical, it's a rule of thumb, it's an economic guideline: By producing at a quantity where MR = MC,
A) profit is guaranteed
B) profit becomes zero
C) the firm incurs a loss
D) profit is maximized (or loss minimized)
E) the firm should increase quantity

Question

Quizplus · Accepted Answer

In economics, producing at a quantity where marginal revenue (MR) equals marginal cost (MC) is a condition for maximizing profit or minimizing loss. This principle is based on the idea that as long as the revenue from selling one more unit (MR) is greater than the cost of producing that additional unit (MC), it is beneficial to increase production. Once MR equals MC, producing more would mean the cost of producing an additional unit is greater than the revenue it would bring, thus not increasing profit further.

It's Logical, It's a Rule of Thumb, It's an Economic