Profit maximization occurs when:

Question

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Profit maximization occurs when a firm produces at a level where marginal revenue (MR) is equal to marginal cost (MC), as long as the price level is equal to or greater than the average cost (AC) of producing that level of output. This can be confirmed by considering the following rule: Profit = Total Revenue - Total Cost. Profit is maximized at the output level where the difference between total revenue and total cost is the highest, meaning that marginal revenue is equal to marginal cost.

Profit Maximization Occurs When