The "rule for maximizing profit" is that a producer should set a price such that:
A) the difference between marginal revenue and marginal cost is the greatest.
B) marginal revenue is at a maximum.
C) average cost is at a minimum.
D) marginal profit is maximized.
E) marginal cost is just less than or equal to marginal revenue.

Question

Quizplus · Accepted Answer

The rule for maximizing profit states that a producer should continue producing until marginal cost (MC) is equal to marginal revenue (MR). This is because, at this point, the cost of producing one more unit is exactly covered by the revenue it generates, ensuring that profit is maximized. Producing beyond this point would mean the cost of producing an additional unit exceeds the revenue it brings in, reducing overall profit.

The "Rule for Maximizing Profit" Is That a Producer Should