The point at which marginal cost and marginal revenue are equal always results in which of the following?
A) maximization of revenue
B) maximization of costs
C) maximization of profits
D) break-even equilibrium

Question

Quizplus · Accepted Answer

The point at which marginal cost and marginal revenue are equal (MC=MR) is known as the profit maximization point. At this point, the firm is producing the optimal level of output where the additional cost of producing an additional unit (MC) is equal to the additional revenue earned from selling that unit (MR). Therefore, profit is maximized at this point as any further increase in production would result in a higher cost than revenue earned, leading to a decrease in profit. Therefore, option C is the correct answer.

The Point at Which Marginal Cost and Marginal Revenue Are