When marginal cost is equal to marginal revenue,
A)an increase in output will increase revenue more than cost.
B)production is being maximized.
C)an increase in price will cause revenue to rise.
D)a decrease in output will decrease revenue more than cost.
E)economic profit is equal to zero.

Question

Quizplus · Accepted Answer

When marginal cost equals marginal revenue, it indicates the level of output where profit is maximized. At this point, producing one more unit would cost more than the revenue it generates, and reducing output would decrease costs more than revenue, hence increasing profit.

When Marginal Cost Is Equal to Marginal Revenue