To make the maximum amount of profits, a business firm will:

Question

Quizplus · Accepted Answer

In order to make the maximum amount of profits, a business must use the least-cost combination of factors for whatever output it finally decides to produce. This is because using the least-cost combination of factors helps to minimize the total cost of production, which in turn maximizes profits. Choosing the output level at which total revenue is maximum or setting the price to cover the costs may not necessarily result in the maximum profits, as it depends on the market demand and competition. Finally, knowing the least-cost combination of factors is also important to ensure that the business is not overspending on production costs.

To Make the Maximum Amount of Profits, a Business Firm