A firm supplying a single product to two distinct submarkets will maximizes profits by equating:

Question

Quizplus · Accepted Answer

Maximizing profits involves equating marginal revenue to marginal cost, regardless of how many submarkets the firm is supplying. Therefore, the firm supplying a single product to two distinct submarkets will also maximize profits by equating marginal revenue in each market to marginal cost, which is option C. Option A is incorrect because average revenue is not used in profit maximization, and option B is incorrect because equating average revenue to marginal cost does not result in profit maximization. Option D is also incorrect because setting price equal to marginal cost does not always result in maximization of profits.

A Firm Supplying a Single Product to Two Distinct Submarkets