A manager maximizes profit when they find a level of output where marginal revenue and marginal cost are equal.

Question

Quizplus · Accepted Answer

This is a basic principle in microeconomics known as the profit-maximizing rule. When marginal revenue (the additional revenue earned from selling one more unit) is equal to marginal cost (the additional cost incurred from producing one more unit), the firm is producing at an efficient level that maximizes profit.

A Manager Maximizes Profit When They Find a Level of Output