A profit maximizing firm will always produce at that output at which

Question

Quizplus · Accepted Answer

At the output level where marginal cost (MC) equals marginal revenue (MR), the firm will be able to maximize its profits. This is because at that point, the additional revenue generated from selling one more unit of output (MR) is exactly equal to the additional cost incurred in producing that unit (MC). Any level of output beyond this point will result in diminishing returns and will reduce the firm's profits. Therefore, a profit-maximizing firm will always produce at the output level where MC=MR.

A Profit Maximizing Firm Will Always Produce at That Output