In general, firms will produce at a rate of output such that marginal revenue equals marginal cost because this output rate will
A) bring total revenue into equality with total cost.
B) maximize the difference between the revenue received from the last unit and the cost incurred in producing the last unit.
C) result in the lowest possible average total costs of production.
D) maximize the firm's profit.

Question

Quizplus · Accepted Answer

Firms maximize profit by producing where marginal revenue equals marginal cost, as this ensures that the cost of producing an additional unit is exactly covered by the revenue it generates, maximizing the difference between total revenue and total cost.

In General, Firms Will Produce at a Rate of Output