In order to maximize its profits,a price-taking firm should produce the level of output at which:

Question

Quizplus · Accepted Answer

In order to maximize profits, a price-taking firm should produce the level of output where marginal revenue (MR) equals marginal cost (MC). This is because at this level of output, the firm is producing the last unit where the additional revenue generated is equal to the cost of producing that unit. Producing any additional unit beyond this level would result in a lower profit margin, as the cost of producing that unit would outweigh the revenue generated. Therefore, option D is the correct choice. Options A, B, and C do not take into account the importance of marginal analysis in determining profit-maximizing output levels.

In Order to Maximize Its Profits,a Price-Taking Firm Should Produce