At the point where marginal revenue (MR) equals marginal cost (MC), marginal profit is near zero.

Question

Quizplus · Accepted Answer

At the point where MR = MC, the firm is producing the optimal level of output where the last unit produced gives the same amount of revenue as the cost to produce it. At this level, the firm is not making a significant profit, but rather breaking even. This is because any increase in output beyond this point will require higher production costs than the revenue generated, resulting in a decrease in profit. Similarly, decreasing the output below this point will result in missed revenue opportunities, reducing profit even further. Therefore, at the point where MR = MC, the marginal profit is close to zero.

At the Point Where Marginal Revenue (MR) Equals Marginal Cost