At the profit-maximizing level of output:

Question

Quizplus · Accepted Answer

At the profit-maximizing level of output, the marginal revenue equals marginal cost. This means that the additional revenue earned by selling one more unit is just equal to the additional cost incurred in producing that unit. At this point, the firm is earning a normal profit, which means that its total revenue is just enough to cover its total costs (including both explicit and implicit costs). Therefore, the marginal profit (which is the change in total profit that results from producing one more unit) is zero.

At the Profit-Maximizing Level of Output